Daybreak Weekend: Homebuilders Preview, UK Jobs, Lunar New Year

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This is Bloomberg Daybreak Weekend, our global look at the
top stories in the coming week from our Daybreak anchors
all around the world. Straight ahead on the program, well,
look at what we can expect from homebuilders in the
months ahead. I'm Nathan Hager in Washington.
I'm Callin Hecker in London. While we're looking ahead to
the UK jobs numbers and asking whether AI is starting
to affect productivity.
I'm Doug Prisner looking at the outlook for Chinese consumer
spending during the Lunar New Year holiday.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg
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Good day to you. I'm Nathan Hager. We begin today's
program with homebuilders. Recently, we heard the Trump administration is
exploring an antitrust investigation into the industry, as the White
House sharpens its focus on tackling the housing affordability crisis
for more and what we can expect from homebuilders in
the months ahead. We're joined by Drew Reading, us home
building analyst for Bloomberg Intelligence. Drew, how do you see
the backdrop now in the new home market?
So in the new home market, the backdrop is still
a little bit challenged. We have made some progress on affordability, which,
as we all know, has been the primary constraint for
buyers out there in the market. Mortgage rates are down
about one hundred basis points from where we were last year.
But what we've heard pretty consistently from the builders that
we talked to is that it's not just about affordability.
It's also about sentiment. You have more consumers out there
in the market who may be concerned about the direction
of the economy, the outlook for employment. There's not a
lot of urgency. And you know, one of the things
I think that's happening is you have a lot of
people sitting on the fence who are saying to themselves, look,
I think rates might be coming down. I think home
prices might be coming down. So I'm going to take
a wait and see approach. Now, with that being said,
we think that the market can grow this year from
a sales perspective, A lot of that's going to be
driven by community count growths. So we actually have new
home sales rising in the mid single digit range. But
we do think that housing starts, which is probably the
most widely followed measure in the new home market, will
be flatish because builders want to work through their standing
inventory before putting new product in the ground.
So that sentiment damper you're talking about, is that across
the board or is it just in the luxury sector,
the load to middle income sector? How does it look
that way?
Yes, so I think we've heard pretty much across the
board from builders that sentiment has been a major issue.
You know, when you start to look at customer profiles,
certainly the entry level has been a little bit more pressured.
If you think of that buyer, they're typically more sensitive
to fluctuations in mortgage rates and monthly payments compared to
you know, call it a Toll Brothers who is more
exposed to the luxury end of the market, where you know,
the buyer is more affluent and doesn't have those same
brate considerations. But you have to think of housing as
an ecosystem so while the higher end may be doing better,
they still need to see movement at lower price points
in order to facilitate those move up home sales.
So if builders are sort of working through this despite
those sentiment concerns, what could that mean for their margins.
Yeah, that's a great question, and it's probably the number
one thing on investors' minds because margins have come in
pretty significantly over the last couple of years. And the
reason is because builders have had to be pretty aggressive
in their use of mortgage rate buydowns in order to
stimulate demand. Now it has helped them maintain sales levels.
If you look at you know, how new home sales
has trended verse the resale market, They've held up a
lot better, but they're having to pay a lot in
order to buy down these mortgage rates. And you know,
what we've heard from those that have reported earning so
far is that they expect the use of incentives is
going to remain elevated through the spring selling season because
there's still, you know, a lot of challenges out there.
We've seen a lot of focus from Washington on the
housing sector as well. These ideas about limiting institutional purchases
of single family homes, maybe allowing more use of four
O one k's for a first time down payment, things
like that. Does that affect your view on the outlook
for the housing market if some of these policy ideas
come into fruition.
Yeah. So policy has certainly become the biggest wildcard I
think for home builders in twenty twenty six. They've been
squarely in the crosshairs of the administration for four or
five months or so, given you know, the heightened focus
on affordability. You know, outside some of the things you discussed,
like the proposalal ban institutional purchases, we really don't have
a lot of concrete ideas. We've got plenty of tweets
and leaked news stories, but nothing substantial yet. I think,
you know, we could hear something at the State of
the Union in a couple of weeks. What that may be,
I don't know, but you know, the administration has been
critical of the large public home builders in particular. You know,
they've talked about their landholding, saying, you know, they owned
two million lots, they need to start building on them,
and they've even threatened to withhold liquidity from them if
they don't start building. You know, they said the builders
shouldn't be buying back their stock, which has become a
big part of their business model. And then the other
piece that we think could be a risk going forward
is you know, the discussion about mortgage rate buydowns. You know,
there were some tweets out there saying that they're artificially
propping up prices. So it does seem that they're looking
at everything, and I think ultimately what it does is
creates a more volatile operating environment and two way volatility
for the stocks.
Are you seeing the industry actively making preparations for whatever
could come down from the Trump administration?
Drew, yes, So, I mean at this point it's kind
of just business as usual. We've heard from most of
them that you know, really since the end of last year,
they've been working alongside the administration and policymakers in a
collaborative manner to try to come up with solutions, you know,
whether they be demand side stimulants or a way to
get more supply into the market. So as of now,
it's business as usual. We'll have to wait until it
comes down the pike.
Thanks for this, Drew, great having you on with us.
That's Drew Redding homebuilders analyst for Bloomberg Intelligence. Let's take
a look now at some stocks making news in the
week ahead. I'm Nathan Hager, joined by Bloomberg News Equities
reporter Alexandra Semanova and Alex are gonna hear from some
big ones this week in terms of the earnings, The
biggest name in retail is reporting on Thursday. What are
we expecting from Walmart?
Hey, Nathan, So it is indeed going to be another
busy earnings week. Walmart is such a bellweather of low
and mid income consumers, so that's going to be an
important company to watch. It is scheduled to report earnings
results before the bell on February nineteenth. And something to
note ahead of its earnings read out is Walmart just
saw its market cap eclips the one trillion dollar mark
on February third for the first time ever. This is
something that you don't see from retailers. It's something you
typically see from tech giants. So Walmart is now in
a category typically occupied by big tech heavyweights such as
Nvidia and Alphabet Inc. And Walmart is a long time favorite,
of course, of bargain hunting consumers, which is why it
has been doing so well. It has flexed its massive
scale and supplier network to keep prices low and grab
market share across various income levels. And not only has
Walmart maintained its appeal to households looking for value, it's
also been recently drawing some new wealthier shoppers as well
with its online business. So when we get to those results,
some of the key metrics to watch will be same
store sales performance. That is going to be an important
metric to monitor growth for long term revenue and profit
expansion for the company, contribution from higher margin businesses to
and inventory management. And I want to point out that
the stock is up something like nineteen percent year to date,
so the bar is pretty high going into these results.
Yeah, certainly with a trillion dollar valuation now and with
the fact that Walmart recently relisted to the Nasdaq, it
really does seem like they're leaning into this tech side
of the story. But we're also going to hear from
another name that we think of more traditionally on the
tech side, door Dash reports on Tuesday.
Right, Yeah, it does, Nathan. So I'd say for this company,
the main thing investors will be watching is signs that
it can monetize on heavy capex spending, so during the
last earnings report from DoorDash, it took a record plunge
after the company said it's going to spend more on
investments next year to build new products and bolster internal tools,
which really weighed on its earnings forecast. These increased costs
contributed to a muted fourth quarter forecast for adjusted even
A specifically, with the company expecting that metric to be
around seven hundred and ten million dollars to eight hundred
and ten million dollars, so watch that number. Also watch
order growth, which is currently exceeding that of some of
its online delivery peers, and it's also supposed to get
a potential boost from Delivery, which it acquired recently, so
that's going to be something to monitor during those results.
And then it is also expanding into new categories beyond
just restaurant delivery, so groceries and convenience, which are expected
to aid with consumer retention and a head of the report,
some of the big Wall Street firms did lower their
price targets on the company. Bank of America was one
of them, lowering their price target to two hundred and
sixty dollars a share from three hundred and five dollars
a share, but it did still maintain a buy rating.
Goldman Sachs added DoorDash actually to its US conviction list,
so that's pretty positive. And one more thing to note is,
of course, DoorDash and Uber just lost a bid to
block a New York City law requiring a tipping option
to be presented to customers at checkout from going into effect,
so it's likely we're going to see perhaps management commentary
on that front. DoorDash has been having a pretty hard
start to the years, down something like twenty seven percent
so far.
Well, another big name we're going to hear from is
a bell Weather on the agriculture economy. Deer has really
been on a tear since the start of the year. Alex.
Yeah, it has been a really interesting company to watch,
given the fact that it's kind of been at the
center of Wall Street's big rotation trade into sectors outside
of technology. So it's actually trading at a record high
now amid a rally that has come as interest rate
cuts and strong US growth push investors into sectors of
the market closely linked to the health of the US economy.
So deer Cell's construction equipment in addition to its iconic
farmer machinery, and that's been an industry that up until
recently was really struggling. Investors are betting it could get
a boost from the Fed's monetary easing and some data
that showed that the US economy is expanding at a
healthy pace. So when the company reports earnings, Wall Street
will be looking for any update on its industry outlook.
Investors are still waiting for a rebound in the US
farm economy, specifically, so something that would spur farmers to
buy new tractors and other equipment. Deer shares had hit
a record last May on the same hopes, but that
turned out to be a headfake, So the key question
is will this also be The farm economy is projected
to extend its downturn actually through twenty twenty six so far,
expecting net farm income to fall by one percent according
to the USDA, and Deer also said in November that
it expected industry sales of large equipment to fall fifteen
percent to twenty percent in the US and Canada, So
we're going to see what it says on those fronts.
It is up nearly thirty two percent year to date,
yet again a company that has a really high bar
going into report.
Yeah, certainly sounds like it. Thanks for this, alex great
having you on with US's great to be with you.
That's Bloomberg News Equities reporter Alexandra Semonova. And coming up
on Bloomberg day Break weekend, we'll look ahead to jobs
numbers in the UK. Is AI starting to affect productivity.
I'm Nathan Hagar, and this is Bloomberg. This is Bloomberg
Daybreak Weekend, our global look ahead at the top stories
for investors in the coming week. I'm Nathan Hager in Washington.
Up later in our program we'll look ahead for what
to expect during the nine day Lunar New Year holiday
in China. But first, the UK is facing a tricky
mix of slowing growth, stubbornly high on employment, and mounting
global uncertainty from trade tensions to tariffs and political turmoil.
But amid the gloom, there is a growing debate over
whether artificial intelligence could help lift productivity and offset some
of the weakness in Britain's labor market, even as questions
mount about whether the technology is already displacing workers. After
recent GDP data out of the UK showed sluggish growth.
We get fresh jobs data from Britain next week. Let's
get more now from Bloomberg Daybreak Europe banker Caroline Hepger
in London.
Nathan AI is talked about as both a coming storm
but also a potential solution to Britain's growth woes. The
UK's unemployment rate has climbed to near COVID levels since
Labour took power in twenty twenty four, but head of
the UK jobs data in the next few days, there
is a new quirk in recent data. Some economists increasingly
think that productivity may actually be improving, and they wonder
if artificial intelligence adoption maybe playing a part. The Bank
of England Governor Andrew Bailey is one of them.
I'm an optimist on the potential for AI and robotics
to move the dial on productivity and thus on economic growth.
I'd like to think, though, that I'm a realistic optimist.
My impression is that we've made more progress so far
applying AI to well defined task based work rather than
some of the more ambitious goals. But I'd also say
I don't find that at all surprising.
So is AI a panacea and what impact is it
actually having on the UK economy. Joining us now in
studio is Bloomberg's UK economy reporter Arena Angel and our
Bloomberg Opinion colonist covering technology, Pamey Olson. Welcome to both
of you. Thanks for being with me, Erna. Can I
start with you just on the actual figures. What are
we expecting from the UK job's numbers in the next
few days.
So next week we'll get the jobs report for December
and the unemployment rate is actually expected to edge up again.
It's now at five point one percent. Some economists for
survey by Bloomberg think it will go up to five
point two percent. And this is just so you have
a sense of how important this is. It's the highest
since sort of COVID time. It's twenty twenty one, twenty
twenty and it will get worse in the next month,
but perhaps not for much longer. The Bank of England
kind of sees unemployment peaking at five point three percent
in spring, and you know, now this is starting to
raise important questions about the job's costs of their you know,
fight to bring inflation back to the two percent target.
The policy has been quite difficult for the labor market
in the UK. What's your analysis about why that is?
Well, it's it's all pointing to one thing. It's the
the payroll tax rises. Chancellor Rachel Reeves' is twenty six
billion payroll tax rises and you know those came on
top of large consecutive increases in the minimum wage. And
you know the country has lost almost a quarter of
a min jobs after these payroll costs were increased in
Reeves's first budget in October twenty twenty four. And since then,
you know, employers have blamed them for job cuts and
hiring freezes and key sectors like retail and manufacturing.
There's been a lot of talk about the number of
young people who are not in work or employment or
training of any kind. That's got quite a lot of attentionion,
But how isolated is the issue with jobs when you
segment things by age or gender or skill set.
Well, most of this increase in unemployment that I was
just talking about has been due to a lack of
hiring so far, rather than mass layoffs. So of course
you know this impacts young pickper looking for their first job,
or just other people you know, moving out of economic
and activities trade into unemployment. And it's actually very interesting
that because men are becoming unemployed at a faster rate
than women, and you know, of course in particular young
men that's a big problem, but men in general. And
it seems like that hiring freezes and layoffs felt particularly
hard in male dominated sectors, so you know, construction, manufacturing,
but also it And this is all kind of helping
Reform because while Reform did not stand out among unemployed
voters at the general election, it has become the dominant
party for this group over the past six months, and
it's particularly unemployed in men who turned to reform. We
have data from More in Common that showed that more
than forty percent of men who are out of work
support reform, and that's double the level in July twenty
twenty four and ten points more than women.
Gosh, that's interesting, isn't it. So the political ramifications then
from the data I want to layer into that outlook
what AI might mean, because I know that the technology sectually.
Liz Kendall was speaking at Bluemberg's headquarters right here in London,
talking about how the government's going to use AI to
turbocharge different industry in Britain. And pledging this idea that
there will be AI training for all UK employees. PALMEI,
you've been covering AI companies and how their tools are
really starting to unsettle the world of business, the world
of work. What kinds of products I suppose, first of all,
are we actually starting to see being used and then
you know, maybe we'll think about what that means for
employment in a minute.
Well, most people are using chatbots already, right, I think
it's something like eight hundred million to nine hundred million
people use chat GPT on a weekly basis. That's something
like ten percent of the global population every week are
using these tools. But the most recent updates have been
agentic AI. Of course, you might have heard that term
agent a lot last year. It was very much hyped.
Unfortunately that didn't have much to show for it. Only
a few companies actually released anything. They were a little
bit unreliable. But actually just in the last few weeks
we've seen a couple of product launches of these AI agents.
And this is different to a chatbot. This is AI
that can not just give you information but carry out
tasks for you. So the one that the market really
got spooked by was a product called claud Cowork, which
came from a company called Anthropic. They were spun out
of open Ai a few years ago, and I've used
it myself. I pointed it at some files on my
computer and got it to create a PowerPoint presentation out
of it. Create a spreadsheet of all the people and
all my interviews with all their areas of expertise, you know,
stuff I'd been wanting to do for years but just
didn't have the time to do. It was even answering
my LinkedIn messages. I didn't even have to go to
LinkedIn and it would just answer them for me. So
those are just some examples of the kinds of things
they can do. And this is what I think is
kind of rattling the markets a little bit, is this
sense that, Okay, some of these tasks that certain jobs
are doing could well be under threat.
The thing is, trade is and investors of reacting pretty
strongly to the idea of these products, but they've not
been fully adopted. Yeah, as you say, lots of people
are testing them out, lots of businesses are trying them out,
and they haven't really claim market share yet. But I
suppose people are wired about whether that's coming or why
that is.
I think so, I think, I think you're right.
I think people just kind of want to get ahead
of whatever disruption is coming and ride that wave. But
this is so typical of the market, right, Like just
a few months ago, everybody was freaking out that we're
in an AI bubble, and now the sentiment, the narrative
has totally shifted to we're practically in the AI singularity.
You know, it's like, maybe not to that extent, but
it is funny how the pendulum has swung so far
the other way. And if you remember, in January last year,
there was a huge drop in the share price of
big tech companies when China's deep Seat came out because
there was a belief that that was going to threaten
the status quo of all the infrastructure and data centers
that was being spent by big tech. Now, of course
that was an overreaction. I think we're seeing the same
thing here, a little bit of an overreaction, but there's
truth to it. But when people are selling off stocks
like Salesforce or some of these other enterprise software makers,
there is some truth that the application layer that those
software makers have, that bit of their business is under
threat I think from these new AI agents that are
coming to market.
Okay, so let's bring that together then with the idea
of jobs here in the UK. How far away is
the future where artificial intelligence does actually make workers redundant,
because we're starting to see bits of reporting around that
and bits of data in Britain.
Well, the obvious casualty for now, maybe it's not quite
showing up in the data yet, is the graduates, entry
level workers whose companies are told treat your AI like
an intern, so they do and that works really well,
and then they don't need to hire interns or junior
analysts or junior researchers. And I think that might just
be the starting point, but I think it's very I
don't think it's going to be as simple as just
jobs get replaced. I think jobs are going to change. So,
for example, I was talking to the head of Zapier,
which is a big software company in the US, and
he was saying that the way they build product now,
they used to have three people who would be on
a team and it's a very classic structure called EDP
or EDMS as the engineer, the product marketer, and then
the designer. Now instead of three people, they just have one,
but that one person has to cover all those three
different areas, so the titles have been squished together into
one person who's using AI to kind of augment themselves.
It doesn't mean the other two people have been fired.
They're just doing different things. So I think we're going
to see a mixture of that of roles just changing
and morphing and blending together, but perhaps a certainly elements
of hiring freezes. I mean, there are some people who've
been using this new clawed plug in for legal work,
and one person told me that they weren't using their
fractional lawyer anymore. For anything up to a commercial contract
worth fifty you know, anything higher than that, you do
need a human. But if it's kind of low stakes,
they were using the AI now, so of course that
is job, a job not going to a human. So
we're seeing I think a kind of mixture of those
things happening.
Yeah, anecdotally, I've certainly seen it with people I speak
to that that they are feeling that change. And I
will point to one bit of data. Morgan Stanley in
the last few weeks has talked about AI leading to
an eight percent net job loss over the last twelve
months in the UK. So there's some tiny bits of
research out there, arena, are we seeing any size that
AI is starting to affect the UK labor market? Is
it's you know, people recently graduating what sorts of jobs
might be affected.
First, I think the problem is not necessarily job cuts,
but the lack of job creation in the UK. So
you know that Morgan Standy research. You know, it's showing
the UK is losing more jobs than it's creating because
of AI, and it's doing sort of faster race than
you know, tries like the US or Japan or Germany.
But if you actually look at the data, the UK
is sort of losing jobs at the same pace as
the other countries. So it's kind of like losing jobs
at the same rate as Germany. It's just creating way
fewer jobs thanks to AI. And some of that is
also due to higher employment costs here that you know
are not really like, it's not really AI is almost
coming in as a solution for companies to deal with
this increase in in in the cost of employing a
human and you know, to be to be sure, like
there's also some productivity gains that are coming as a
result of adopting AI, and there are you know, this
is you know, one for the AI optimists like the
Bank of England Governor Andrew Bailey.
The fact that you know, these companies.
Are actually changing how they do things after adopting AI.
And you know, maybe the UK.
Is is about to see a productivity like find to
finally escape it's productivity trapped.
But there the data does point.
To the fact that there are some job losses to
come and the cost of this may be a bit
too high or weren't already to deal with it yet.
My thanks to our UK economy reporter Arena Angel and
to our Bloomberg opinion columnists covering technology Pamey Olson. Thank
you so much, and we'll have full coverage and analysis
of the UK's jobs data. I'm Caline Hepga Here in London.
You can catch us every weekday morning for Bloomberg Daybreak Europe,
beginning at six am in London. That's one am on
Wall Street.
Nathan, Thanks Caroline, and coming up on Bloomberg day Break weekend,
we'll look ahead to lunar New Year festivities in China.
I'm Nathan Hagar and this is Bloomberg. This is Bloomberg
day Break weekend, our global look ahead at the top
stories for investors in the coming week. I'm Nathan Hager
in Washington. We go to China next, where Lunar New
Year festivities are set to take off. The nine day
holiday will drive spending on travel, dining, and gift giving.
For a look ahead, let's get to Doug Krisner, host
of the Bloomberg Daybreak Asia podcast.
Nathan. The Lunar New Year Holiday or Spring Festival, is
one of China's longest holidays, and this year it will
usher in the Year of the Horse. Festivities will run
for nine days from February fifteenth. That's a day longer
than usual, and as usual, the focus for markets will
be on consumer spending. Now we know the Chinese economy
continues to struggle, largely due to weak domestic demand. For
a closer look at the holiday mood, let's bring in
Bloomberg's Shirley Joo. Shirley covers consumer companies in the region
with a close eye on luxury goods, and she joins
from our studios in Hong Kong. Thank you for being here.
First of all, Shirley, I want to know about the
level of confidence among consumers.
I think people are relatively optimistic because although China is
in an economic slowdown and people's spending power has not
been as strong as before, and people spending appetite has
been weakening, but Lunar New Year is one of China's
biggest holidays, and people tend to stay in the country
instead of traveling outside because the holiday is all about,
you know, spending time with your family. So it's like
Christmas in the US or in Europe. It's a big holiday,
and people tend to want to spend on food and drinks,
on you know, big meals outside. So people in the
food and drinks industry at least are relatively positive about
the outlook of Lunar New Year. But how much it
may grow from last year, or whether it will grow
at all, it remains to be seen, because, as I
said just now, people's spending appetite still remains relatively weak
in the broader economic slowdown.
So if a consumer, let's say, were to make the
choice to travel abroad or offshore somewhere, what destinations have
become popular. I'm thinking Korea, Japan is that likely. Maybe
even a place like Vietnam.
Yes, for people in mainland China, Korea has become one
of the hottest destinations for people to travel outside, maybe
in the latter part of the holiday, because at the
beginning of the holiday, everybody will stay home and stay
spend time with family, and then they will visit their
neighbors and relatives. So the first few days people tend
to stay within the country, but in the second half
of the holiday, some people may choose to travel outside.
And Korea has become a really hot destination, and Japan
used to be a hot destination as well, and especially
when yen is so keeap. Now people should have, you know,
chosen Japan. But unfortunately, since China and Japan got into
this big dispute over Taiwan late last year, China has
instructed airlines to cut their flights or even hold their
flights for a prolonged period of time.
So flights were.
Really limited in mainland China for people who want to
go to Japan. And you know, under this rising nationalism
and domestic pressure, a lot of people would choose to
go to other places than Japan, So we will say
Korea and definitely Southeast Asia, places like Thailand and Vietnam
would be preferred destinations for mainland Chinese travelers. For travelers
from Hong Kong, Japan remains a big destination, and other
places like Taiwan, in Korea and Southeast Asia.
In addition to eating lots of good food, gift giving
is a major part of the festivities, and red envelopes
in particular. Talk to me a little bit about the
red envelope and how some e commerce companies are trying
to convert that type of gift giving into online commerce.
Right. So it's interesting because Bloomberg Hong Kong actually so
we have a weekly newsletter and this week's newsletter is
actually a review of red envelopes by different brands and
financial institutions. So, for example, Hong Kong's flag carrier, Cathay
Pacific has issued a really fantastic set of red envelopes
featuring the company's history and their milestone plane models over
the eighty years of its history. So envelope is definitely
a huge tradition. And if you have children, or if
you will go to meet your friend's children, then you're
supposed to give red envelopes to well with money in
it to them because they are junior to you, but
your parents or people who are senior to you will
give you red envelopes with money. So that's been a
huge tradition in China and Hong Kong. But over the
past few years, you know, e commerce has developed so
fast in China, it's you know, so ubiqulous everywhere and everybody.
It's got to a point that if you go to
China today, if you want to use cash, it's very
difficult because very few places accept cash anymore or they
don't have changes for you. So everyone is paying online
using e commerce platforms. And in fact, my parents and
my relatives are giving me money via online envelopes, so
we can see, you know, there's a huge shift of
people know of this money gifting from offline to online.
I know you focus a lot on luxury goods, and
I'm wondering about the outlook for luxury sales given the
state of the economy and how consumers are feeling about
their finances. Is there, in your view a risk that's
spending on luxury items, particularly on those well known fashioned brands,
is a little on the soft side.
Yes, Over the past two years in China, the trend
is definitely that people are becoming more cautious and selective
when it comes to buying big ticket items, including like jewelry, watches,
and leather goods, you know, all those luxury brand items.
The trend in China is that people are now becoming
more aware of their own needs and their own lifestyle,
and they don't have much money or they don't feel
rich enough for them to buy a huge amount of
luxury stuff, so they're becoming more selective. They are not
only looking at brand names, they're also looking at whether
they identify with the brand stories, the brand philosophy, and
whether these brands can elevate their lifestyle, it can make
them feel better. So in the past, you could see
that people would just go to any luxury brand stores
because of the brand names. People thought that, you know,
if they bought luxury goods, it could elevate their status.
But now people are really choosing very carefully, so luxury
gift gifting could still become a bit subdued in China.
But this year, you know, everybody's going after gold like crazy,
so I won't be surprised to see that. You know,
gold gifting could become a big trend in China during
the Chinese New Year, because you know, the gold prices
have been going up and up and up right, and
in China, you know, everybody goes into this investment if
the prices keep going up, and you know, everybody pulled
out if the prices come down. So yeah, people are
there's a huge frenzy over gold in China right now.
We talk about the many ways the Chinese government has
tried to tackle the problem of weak domestic demand, and
since holiday spending has the potential to provide a bit
of a lift to the overall economy, I'm wondering about
what the government is doing to encourage consumers to spend
more than they would otherwise.
Yes, so the Chinese government has actually focused more on
consumption than before. So previously is focus was on you know,
heavy industries and new industries for example, like ev and
new energy sectors. But it has come to realization that
consumption is a big part of economic driver. So it
has been issuing, for example, consumption vouchers and has been
implementing policies to encourage people to buy things. So that's
a good shift and it's a you know, we have
seen the Chinese government doing more in encouraging people to spend.
In China, I've learned that much of the gift giving
during the Lunar New Year holiday has been described as
emotional consumption. We've also seen a tendency to favor experiences
rather than goods. Surely, I'm going to go out on
a limb here, so work with me, and I'm going
to ask whether their gifting stock is something that consumers
would ever consider.
Actually, that's a really interesting thought, and I definitely wouldn't
mind if people give me, you know, stocks in major
Hong Kong or mainland companies. But this is not a
trend that I have observed. In fact, in China, I
still think that the majority of people don't think stock
market being a safe way to put their money in
a lot of Chinese people still think that property is
their only way of investment because it's safe and the
prices would be bound to go up. And of course,
you know, that was up until a few years ago
when China's property markets started to crash. So a lot
of Chinese people's wealth because everybody invested in property before
the property market slowed down, so huge amount of Chinese
people's wealth was locked up in the property market. That's
why people are spending less now because their wealth is
locked up, and even though their income remains unchanged, they
still feel that they're not rich. They still feel poor.
So that's why people are not spending. Of course, you know,
I won't be surprised if China's stock market and China's
financial market become better regulated, and if China gives more
flexibility for people to invest in different financial tools. Stock
market could become a big investment for Chinese people, and
stop giving could become a trend. But at least for now,
I haven't observed this as a big trend right now.
Just a thought. Shirley, thank you so very much, and
happy New Year. By the way, Bloomberg Shirly Joao joining
from Hong Kong. I'm Doug Kristner. You can catch us
weekdays for the Daybreak Asia podcast. It's available wherever you
get your podcast. Nathan.
Thanks Doug, and that does it for this edition of
Bloomberg Daybreak Weekend. Join us again Tuesday morning at five
am Wall Street Time for the latest on markets overseas
and the news you need to start your day. I'm
Nathan Hager. Stay with us. Top stories and global business
headlines are coming up right now,