Daybreak Weekend: US Jobs, Wimbledon Tournament, Vietnam Eco

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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, we
look to some key jobs data in the US and
how they may affect FED policy moving forward. I'm Nathan
Hager in Washington.
I'm Caroline Hegger in London. Where we're asking if this
is Wimbledon tournament, can serve up an ace?
I'm Doug Chrisner looking at the balance of growth and
inflation for Vietnam's economy.
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 some key economic data in the US. On Thursday,
we get non farm payroll numbers from the month of
June at eight thirty am Wall Street Time. The report
is coming a day earlier than usual due to the
Independence Day observance. Here for a look ahead to the
numbers is Edward Harrison, Bloomberg, senior strategist and author of
the Everything Risk newsletter. Good to have you with us
ahead of jobs Thursday, ed it seems like we've been
talking for so long about a low higher, low fire
labor market. Do you see that shifting ahead of what's
to come this week?
Hi, Nathan, I think yes, I do see that shifting,
this low fire, low higher market that we've seen. I
think last month's number broke that streak. We got a
one hundred and seventy two thousand jobs added to non
form payrolls. We also had upward revisions to the prior
month to the point where the three month average was
even higher at one hundred and eighty eight thousand. So
we're looking at almost two hundred thousand jobs per month
being added to non farm payrolls over the last three months.
So do you see that trajectory continuing? I mean, two
hundred thousand on average sounds like more of a steady
labor environment than we've seen lately.
It definitely does seem that way now, bloom the average
economist in Bloomberg Consents to survey says around one hundred
and thirty five added. But even if you have one
thirty five, that's you know, fifty thousand lower than the
average that we had before. You're really still looking if
we get that number at around one hundred and fifty
one hundred and sixty thousand jobs per month for the
last three months, and that's very good, and the unemployment
rate would be at a four point three percent. What
that says is we do have an improvement in the
labor market in the US.
What do you see pinning that improvement when you know
so many economists leading into these non farm payrolls reports
month in and month out of sort of been surprised
by the resilience in the labor market.
Well, you know, I think that the resilience in personal
income and spending has been a big part of that.
If you looked at the numbers that came in last week,
we saw that personal spending was up zero point seven
percent month on month, that was above expectations. Personal income
was also up zero point seven percent above expectations. Of course,
that brings inflation with it because the headline PCE Price
Index increased by four point one percent, you know, over
four percent. That's like double the fed's target in the
year to May. But irrespective, you know, you've got income
and spending underpinning the ability for jobs to contain.
Do you see wages keeping up with the pressures that
we continue to see in prices like that FED Preferred
inflation gage that you just mentioned.
Yeah, I think that the closer that we get to
full employment, the more chance that you're going to see
wages increasing. The number that we saw in the last month,
that is in May survey was three point four percent
for average hourly earnings year and year. Economists that are
expecting three point five percent, So they're expecting that to
go up, and that's going to give people the wherewithal
to a certain degree to deal with the inflation that
we've seen over the last year.
And you know, with all those factors in place, it
sounds as though the bias that we heard from FED
Chair Kevin Walsh earlier this month toward reigning in inflation
might be justified. Here, what's your expectation when it comes
to the FED potentially trying to rein in some of
these increases that we're talking about with a hike.
Yeah, I think that the FED is going to hike
this year. The market has sort of backed off what
it's thinking in terms of hikes. We have the market
expecting at least one hike this year, not two hikes.
The first date in which they expect to hike is
in October, so that's three FED meetings from now. We
have July, September, and October. I would say that the
likelihood that they do hike, given what we've seen in
the inflation picture, is sooner than the market expects. And
depending upon how this job's number comes out, we could
see then you know, jobs doing very well, inflation being high,
especially core inflation, and those two leading the market to
start pricing in an earlier rate hiking, potentially two hikes
in twenty twenty six.
Really appreciate this and again thanks for coming on with
us ahead of Jobs Thursday. That's Edward Harrison, Bloomberg Senior
strategist and author of the Everything Risk newsletter. Let's take
a look now at some stocks making news in the
week ahead. I'm Nathan Hager, joined by Christy to Kino,
Managing editor for Bloomberg Markets Live on a week where
we're going to hear from a few more companies reporting
earnings as we wind down the season. Christine a few
household names this week, including Nike on Tuesday. Our investors
finally going to hear the turnaround is swishing upward for
a change.
I see what you did there, Nathan, And yes, I
know that is definitely the hope. Very interesting though, because
Dan has a leadership change shortly before the earnings results,
which are due on the thirtieth of June. So apparently
David Denton will take over CFO in August. And interestingly,
he is not an insider. He hasn't been a career
employee at Nike. He's actually moving from Pfizer and has
done similar stints at Low's and CBS as well. So
that's quite interesting bringing in an outsider rather than someone
who's familiar with the business and familiar with the turnaround plan.
So obviously a pretty big change from bringing in a
former insider to be the CEO. So what kind of
fresh blood of fresh look at the company could we
expect once they report earnings this week?
Yeah, I mean that is the big question, isn't it, Nathan.
That's something that investors and analysts will definitely. Note I
mean City Group analysts noting that it is quite surprising
that they're doing this just ahead of those fourth quarter results,
especially because the company is still under immense pressure to
really show the results of this turnaround plan. The stock
price is still hovering at around the lowest since twenty fourteen,
and investor confidence is a little bit still at the lows.
But you know, maybe a fresh blood might be just
what the company needs for a bit of a turnaround here.
But we'll find out more when they give us the
details next week.
Absolutely, Also on Tuesday, we're going to get results from
Constellation Brands after the bell. It's been a tough time
for the beer and wine business. Are we gonna be
able to raise a glass to these results?
I mean, based on the assessment from Jeffrey's analysts, there's
still a lot of caution on that front, Nathan, I mean,
they're worried about just the overall trend of declining alcohol
consumption trends in the US because you know, the younger
generation don't drink as much anymore. I don't know what's
up with that, but that's definitely something that is a
bit of a negative for Constellation brands Jeffries in particular,
still expecting the company to reiterate those organic sales around
minus one percent to plus one percent. But one silver
lining is they do have strong ads spending for the
World Cup, but then that also cuts into their earnings margins,
So we'll see if that pays off when we get
those results. Might be a little bit early, but you know,
a little bit of positive momentum hint, hurt the brand
at this moment.
Yeah, so a lot of crosswinds. They're not just from
consumer changing habits and those advertising spending potential headwinds there,
but I mean the entire beverage industry has been dealing
with rising commodity costs from what's been happening in the
Middle East as well. I mean that could have an
impact on the results too, couldn't it.
Yeah, absolutely, I mean margins definitely something to wash for
Constellation brands. I mean, some of the costs for raw
materials aluminum cans, for instance, have gotten a lot more
expensive over the last few months. Of course, we know
that flows through the strait of hormones finally starting to flow.
We've been getting reports on that as well as US
and Iran make headway towards a striking a longer term deal.
But yeah, it takes a little bit of a time,
doesn't it. I mean, we've definitely seen a lag in
some of those prices when it comes to kind of
coming back down for the recent high. So that's something
that Constellation brands will definitely have to answer for when
we hear from them next week.
Yeah, I'll be interested to hear as well about how
they might be adapting to those changing consumer habits, because
it seems like there's been a lot more interest as
well in non alcoholic beer and wine, so we'll be
watching that too. On Wednesday, we're going to hear from
General Mills and correct me if I'm wrong, Christine, But
it seems like the last few months have been pretty
rough for name brands at the grocery aisle. Am I
remembering that, right?
Yeah, that's absolutely right.
It has been a tough period.
But we are seeing, for instance, Bloomberg Intelligence analyst saying
that perhaps actually the worst of it might be over
for some of the national food brands like General Mills.
They're projecting that some of the sales for these brands
could climb about three percent to four percent this year.
I mean, of course, house brands have an advantage, especially
when it comes to costs for consumers. But I think
there's a little bit of room now for some of
the brand names to gain back some of that ground.
And you know, another theme actually that could be going
well for General miss is the pet food business, because
we know that people love spending money on their pets.
Oh, and that.
Is something that could be a bright spot potentially.
Okay. I kind of wonder though whether a company like
General Mills and some of its competitors as well, might
be weathering some of these issues around price by doing
something that I've seen over the last few months, if
not years, packaging getting smaller. Is that something we could
hear about on the call.
Yeah, I mean, that's certainly one way to mitigate some
of the costs, right that we've been talking about in
relation to other companies. And certainly if you're spending less unpackaging,
especially given the current era of still high raw material prices,
that certainly helps for sure. And so yeah, maybe something
that could at the margin help General Mills kind of
gain more solid footing here. But yeah, we'll hear from
them on the first of July is when there are
things I do.
Yeah, a lot of big consumer names to look forward
to on the earnings front this week. Thanks for this, Christine,
really good to have you with us. That's Christina Kino,
Managing editor for Bloomberg Markets Live, and coming up on
Bloomberg day Break weekend, we will look ahead to this
year's Wimbledon tournament. I'm Nathan Hager, 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. Later in the program, we'll
look to some key economic data coming up this week
in Vietnam. But in the coming days, London's All England
Club once again becomes home to the biggest stars in
tennis as they battle for one of the sport's most
prestigious titles. This year's edition of Wimbledon promises to be eventful.
Is one of the greatest ever living players makes her return,
and ticket resale prices sore for more. Let's go to
London and bring in Bloomberg Daybreak. You're a banker, Caroline Hepger, Nathan.
Wimbledon is a British institution in years gone by. It's
featured classic battles between greats like Federer and Nadal, many
a royal spectator, and even carried the hopes of a
nation as British players have pursued glory on home turf.
This year is set to be no exception, with the
competition already making headlines. Seven time champions Serena Williams, considered
by many to be one of the greatest players of
the Open era, will make her return to singles tennis
at Wimbledon after retiring in twenty twenty two. The forty
two year old received a controversial wildcard spot. How the
competition driving further interest in this year's event. Bloomberg's reporting, though,
has found that ticketing is more exclusive than ever. Debncher's,
a niche financial instrument that grants the hold of some
of the best seats at Wimbledon, are now changing hands
for more more than half a million dollars. Swing prices
for fans is a phenomenon taking hold of much of
the rest of the sporting world too. It's part of
the reason that investors are paying much more attention to
the profits from sports. Dave Days is global cohead of
Sports franchise and investment banking at Goldman Sachs. He says
growing interest in the sector is a big opportunity.
We're seeing a lot of interests across really three different
groups of three different groups of buyers, but you can
aggregate audience. Media rights are growing pretty dramatically given that
sense is something people want to be part of. And
so again it's back to this community pricing leverage your
ability to really grow and for the North American leagues
and the many leagues around the world, you do have
some level of governance in essence salary cap in place
where you have some level of control in terms of
the costs, but there are many, many different ways you
can grow from a revenue perspective.
That was Dave Days from Goldman Sachs speaking to Boomberg.
Zisa Brahmewitz and Anne Marie Haudn joining us now for
more on what to expect from this year's Wimbledon and
the intricacies of ticket pricing is Boomberg's UK Business editor
Jamie Nimmo and our reporter Aishaitiallo. Welcome to both of you.
Thanks for your time. Jamie, I want to start with
you because this is quite a niche little business, isn't
it that Wimbledon has in terms of the tickets for
Center Court and Court number one at Wimbledon. Explain how
it works. What are these debenchers.
Yeah, well, most people will enter the ballot and pay
a few hundred quid and if they're lucky, they can
get tickets to center court Court one. If you're not
one of those people, you might queue up for hours
overnight in a tent or whatever, and then you might
get a ticket for the outside courts. If you're one
of the lucky few, there are these debenchers. There's about
two and a half thousand in center Court one and
a half thousand in Court one or thirteen hundred caught
one and then you base have the tickets next to
the Royal Box. You can access the VIP areas, the restaurants,
all the fancy bits that go on slightly exactly now
the catches. You have to pay a lot of money
to get these tickets. So the center court, the benchers
that start this year went on sale two years ago
at one hundred and sixteen grand, so you need a
bit of money to spend on these things. But then
you're guaranteed ticket for you know, fourteen days every year
for five years, right, so you know it's a pretty
pretty nice nice gig if you can get it.
Yeah, and their class is transferable security to get some
kind of tax benefits in the UK as well, So yeah,
it is interesting. And you can sell the tickets as
well if you don't want to go on a certain
number of days.
That's the kind of quirky thing about these because you
can't sell any other Wimbledon tickets. If we bought a
ticket on the you know, via Wimbledon, you can't resell
that ticket, right, But these are the only tradeable tickets,
so you can make a load of money because the
demand from people from the US, India, China coming over
to visit London for the summer. They'll want to go
to one within and they'll pay thousands of pounds, so
you can make the money back on those days. You
can go whenever you want. You could. It might be
that you just want to go to the men's and
women's finals and the last weekend well for sure, and
sell all the other days and you can make you
more than your money back basically, which is fascinating.
I think, Yeah, that's really interesting. Isn't it. We'll get
into the kind of quirks and the traditions of wilmbledon
and so on in a moment. Eichha. You've been to
lots of the Grand Slams, not to s W nineteen,
but it is quite different, isn't it the way that
all of the Grand Slams around the world operate in
terms of the tennis traditions and what you see in
terms of sports.
Wimbledon is the most prestigious Grand Slam of the four.
If you ask many players, they'll tell you if they
could win one Slam, it's going to be Wimbledon. I
mean it's the first one. I begin in eighteen seventy seven.
You know, players are donned and all white. This was
from a tradition that started since it's beginning where they
didn't want to see the sweat of players through their
clothing because it wasn't you know, proper. So there are
many kind of quirks of the tournament, including the all
whites as well as the q As we mentioned briefly,
you know, this is maybe one of the few sworting
events where you can line up and get tickets day
of which is which is pretty interesting and even on court,
I think you'll also notice that you'll see minimal advertising
as opposed to the other Grand Slams. This is for
the clean look that that Wimbledon likes to likes to have,
and that's just one of many. When you think about Wimbledon,
you also think about strawberries and cream and kind of
these interesting things that attendees get to experience, who are
also addressed to the Nines compared to other Grand Slam
events as well.
Yeah, and this see it could be really exciting with
Serena back and whether she has a chance of winning.
I mean, who are the favorites this year? And for
that global audience, you know that as Jamie was saying,
sees so much appeal in Wimbledon and for kind of
diehard tennis fans obviously this is a major annual event.
So who do you think are the favorites this year?
When you look at the men's side, you know, this
is another tournament this year that we're not going to
see Carlos Alkarez, the number two player in the world.
I think the man to beat and like much of
the year, is going to be Onick Center, the number
one player, even though he hasn't won a Grand Slam
this year, He's won pretty much everything else. He is
the defending champion as well. I think, you know, you
could also say that Novak Djokovic, this might be his
last good shot at number twenty five for him. I
think Jack Draper hometown hero. He's coming off of injury.
He has Andy Murray on his coaching team this upcoming Wimbledon.
He's playing good and I think he he's going to
have the backing of the British British crowd of course,
so I wouldn't count Jack Draper out as well. On
the women's side, I think it's going to be a
bit of a toss up. Last year we saw kind
of a random winner in Egos Friantek. I think it's
going to be a toss up on the women's side.
I would say it's going to be a random winner.
I think Arena Sabalenka, the number one player, has been
a little bit shaky. She lost in Berlin a few
weeks ago to Jessica Pagoula, so we'll see. It's going
to be a toss up on the women's side.
I show Serena is back playing at Wimbledon, why do
you think she's coming back at this point in her career?
What do you think she's going to serve off at Wimbledon.
It's going to be a challenge for Serena. You know,
she's coming back without much match play at forty four
years old. It's going to be quite demanding physically to
play singles on the grass courts. We're going to see
she is one of the greatest competitors, if not the
greatest competitor of all time. But if I was a
betting woman, I wouldn't put my money on her.
To say that.
Okay, so those are all the runners riders then, and
what maybe possible on court? I mean also we're going
through a heat wave in the UK, so if that
continues is going to be quite interesting and maybe shake
things up. Certainly presents some difficulties for the grass courts,
of course, as sent to Court Jamie. The business side
of this, I mean, why are we seeing so much
demand though for these debenches tickets? I mean they've existed
for ages. The structure of them has kind of changed
over time, hasn't it the rights that it confers on people?
But you've written a really interesting story about the price
of these particular tickets in the sporting world has just
gone through the roof. It's astronomic. Why what is driving
that demand?
Yeah, right, you know when I mentioned earlier they went
on sale for one hundred and sixteen thousand pounds. That
sounds a lot. But in the two years since, you know,
recent trading prices are up at nearly four hundred thousand
for these So you're talking, you know, that's more than
you know made of in video stock in that time.
You know, it's pretty incredible. The demand is part of
in line the ticket prices as well, like the demand
generally to attend is driving up ticket prices, which is
then driving up the debenture to the values. But but
like you say, it's you know, it's it's interesting. It's
an interest from all around the world. You know, say,
if you're growing demand from India as well, which you
know that you're seeing. You know, younger people from India
travel around the world, especially to places like London in
the summer. They might go to the cricket this summer
and then they might think what else can I go to?
And they might think, oh, I can spend some money
and go to Wimbledon as well and other popular sport there.
US is really driving that demand. As I mentioned, still
they're the they're the main buyers of these on the
resale market and driving up the cost. But it's you know,
sport generally, valuations arising, whether it's teams, franchises or ticket prices,
it's all it's all going up.
Yeah, we've been talking about the World Cup and the
dynamic pricing there and all the controversies around that. I showed.
There's also been a lot of controversy recently about how
much of a share of tournament winnings is actually paid
out to the players, What has happened and how might
we see things actually play out at Wimbledon this year.
So over the last couple of years, there's been constant
discussions amongst between players and the four Grand Slams about
revenue share. The players are demanding a higher revenue share
coming from the tournaments. They're seeking about twenty two percent
by twenty thirty. Currently each Grand Slam has different percentages
I think, ranging from about twelve to sixteen percent, and
so they're arguing that compared to other sports, they're receiving
less of the revenue from these major tournaments as Jamie's
been saying, they've only been getting you know, they've only
been receiving more and more money, and so players want
a little bit more say and how much they're making.
They also want to they want a little bit more
say in how the scheduling is being implemented the season.
Tennis is one of the longest sports when you look
at their season starts in January and things kind of
wrap up in November, so it's all year long, and
they want to be they want to hire, they want
more of a voice in how the scheduling has been
going on. And so these discussions which has been happening
between the players and each each of the four Grand
Slams separately, has been a lot of backdoor over the
last you know, eighteen months to twenty four months.
Great stuff, lovely to speak to both of you. Thank
you so much for your time. That is big Bergs
Jamie Nimmo and Aishadiano talking about Wimbledon. Hope some of
you out there get to snapops and tickets for sw
nineteen of course and all the tennis action. I'm Caroline
Hepga hit in London. You can catch us every weekday
morning here for a blue big day break you at beginning
at six am in London. That's one Amma.
We'll seek Nathan, Thanks Caroline, and coming up on Bloomberg
day Break weekend, we'll look ahead to some key readings
on growth and inflation or Vietnam's economy. I'm Nathan Hagar,
and this is Bloomberg. This is Bloomberg Daybreak Weekend, our
global look ahead, the top stories for investors in the
coming week. I'm Nathan Hager in Washington. This week we'll
get some key readings on growth and inflation in Vietnam.
For a closer look, let's get to Doug Krisner, host
of the Bloomberg Daybreak Asia podcast.
Thanks Nathan. Vietnam is a key member of ASSION, the
Association of Southeast Asian Nations, and together these eleven countries
make up the world's fifth largest economy. Among the major players,
we've got Indonesia, Singapore, Malaysia and of course Vietnam. Now
on its own, Vietnam is one of the world's fastest
growing economies. In the first five months of the year,
industrial production rose at an annual rate of nine point
one percent, and retails sales grew at eleven percent, and
I think it's fair to say those numbers would be
the envy of any jurisdiction. Now, in the week ahead,
we'll get Vietnam's GDP figures along with the latest monthly
reading on inflation, and for a closer look at the
Vietnam growth story and what we are likely to see
in the data in the week ahead, let's bring in
Bloomberg's Francesca Stevens. Francesca is our Vietnam Bureau chief, and
she is on the line from Hanoi. Thank you so
much for being here. So I kind of laid out
some of the data points around the growth story. I'm
curious as to how you believe the government is going
to view these numbers and the degree to which it's
trying to shape economic growth.
So we get the latest imprint next week, when the
big thing we're watching here is to see just how
far off the ten percent growth target Vietnam is at
the moment. Last quarter it came into sunder eight percent.
Anything around eight percent would still be great for Vietnam
because of the last few months when we've seen the
Iran war having an impact across this region, with rising
energy costs feeding into higher costs for pretty much everything,
So we're really watching out to see if the government
here starts softening its language on the double digit target.
There hasn't been any sign of that yet, and in fact,
in the last few months, we've just seen imports from
China continuing to surge, as have exports to the US
in the latest In the most recent US data, actually
Vietnam posted the second largest deficit with the US, behind
Taiwan and ahead of Mexico and China. But as I said,
one of the bigger concerns here at the moment is inflation.
It ticked up to over five percent in May, which
is over the government targeted at the moment, as that
surge in global energy prices trickle through. The government actually
at the moment is looking at the average for this year,
which is around four point three percent. So as far
as it's concerned, I think there is a little bit
of wiggle room. We are watching out to see if
we're going to see any adjustment to the key policy
interest rates here. We haven't seen any adjustment since the
summer of twenty twenty three, so it's been quite a while.
But if the FED raises rates in the next few
months that might change things. But in the meantime, as
I say that, the government here is hammering hard on
the growth story. We've got massive construction going on across Vietnam,
including here in Hanoi, where there's a big two point
five trillion plan to overhaul the city. There's construction everywhere,
and the government's really pushing hard on that growth story.
So I think of manufacturing obviously when I think of
the Vietnamese economy. Also logistics talk to me a little
bit about how the economy is undergoing some sort of
digital transformation, and also where green energy fits in as
part of the growth story.
So there is a lot of messaging here around the
green transition, and it is really important for Vietnam because
it's on the frontline of climate change where its long coastline.
We saw really intense storms last year, and that's only
exacerbated the need for this push to green energy, and
particularly after the last few months when obviously we've seen
all the uncertainty because of what's been happening in the
Middle East. So the government has been pushing hard to
improve the renewable energy space here, but there are a
lot of complexities around how the grid operates how EVI
and the state owned utility manages its relations with renewable
energy companies that want to come in, and there are
there are there are a few ongoing issues around historic
feed in tariffs for energy companies. So there is a
big push to improve the renewable energy sector here, and
you know, solar power is obviously something that Vietnam could
be making the most of. In fact, some of the
industrial parks are now starting to install their own rooftop
solar systems. There has been a push to get offshore
wind up and running, but again there have been a
few challenges with that implementation. And also there's a there's
been a big push to integrate more LNG into the
energy mix, but Vietnam's coming from a slightly standing start,
I think when it comes to LNG. So there is
a lot of discussion about bringing more energy into the mix,
but the infrastructure isn't there yet. So at this point
they're still at the implementation stage of trying to figure
out how and where to build the necessary terminals, the
necessary infrastructure to get the L and G in. And
then in addition to that, there is a proposal to
revive nuclear power. There's two nuclear power plants down in Nintwan,
which the government is trying to revive on a very
quick timeline. There is Russian involvement in one of those
nuclear power projects, and South Korea has expressed an interest
in being involved in the second, but those are still
a little way off when it comes to coming on stream,
and health painted contribute to the energy mix.
So we know that the export economy is a very
important driver of growth. We also know that tariffs have
been a major instrument of trade policy from the Trump administration.
They were applied a while back on goods leaving Vietnam
for the US, and the reason this was done strategically
was to try to get an upper hand in negotiating
a trade agreement. So there was some sort of deal
that was agreed to. And I'm curious as to get
your take on where we stand right now in the
story of US Vietnam trade. Where are we now.
It's been a really long journey with the trade deal
and they're still at this stage, is still not a
final trade agreement between the US and Vietnam. They came
out with a framework last October, but since then we
haven't seen the final deal signed, and actually In the
last few weeks there's been more pressure from the US,
so Vietnam is now facing three separate Section three oh
one investigations alleged excess manufacturing capacity, forced labor, and the
most recent was into IP violations. In fact, in the
most recent report, Vietnam was the only country named as
a priority foreign country, as a sign of just how
seriously the US is targeting Vietnam under these these various
different investigations. So is this going to force Vietnam back
to the table to sign a trade deal soon? Quite possibly.
The deal got bogged down by discussions over what constituted transhipment,
which was one of the headline headline figures that came
out of the trade deal negotiations last year, with the
US threatening a forty percent tariff on good steam to
be transhipped. But there were very but there were many
questions around how that would be defined and how you
would monitor it, etc. And as far as we understand,
that is still one of the issues that is holding
things up, as well as the situation around intellectual property violations,
which the US has been coming down hard on Vietnam
on in recent weeks now, Vietnam has has been very
vocal about stepping up its campaigns against fake counterfeit goods,
shutting down piracy websites, etc. But at singstand at this moment,
it doesn't seem like that's been enough to convince US
investigators that it's doing enough. And in the meantime, Vietnam
is continuing to balance its relations with China. We're still
seeing a lot of Chinese involvement and investment in northern Vietnam.
They're working on three different rail link rail links together
to connect northern Vietnam to southern China. And we're also
waiting for an announcement at the moment about who will
win the contracts for a north south high high speed
rail project, which again could be Chinese involvement. So as always,
Vietnam making sure to balance its relations with the two
big superpowers as carefully as ever.
For the investment community, I'm curious about the way in
which Vietnam should be viewed. For such a long time,
it was viewed as a frontier market, and I would
imagine that there are still a diversity of opinions in
understanding the type of market that Vietnam represents in terms
of investment opportunities. Give me a sense of what we're
looking at in terms of scope and how Vietnam is
being viewed right now, and maybe a little bit of
the diversity of opinion that's that's out there.
Look, I would say on the whole, there is a
huge amount of optimism around the Vietnam market at the moment.
We've got the foot see Russell upgrade from from Tier
market to emerging market status that's going ahead in September,
but that's really seen as just one step on the
much bigger path that Vietnam wants to take, which is
getting upgraded by MSCI. There was a review last week
where there had been some hopes that Vietnam would be
placed on the watch list for the upgrade, but it
seems that it's too soon for MSCI. And there are
a few issues that they raised which are which you know,
reflect the broader concerns of the investment community, and that
is around low free float levels some firms. They also
raise continued limits on foreign ownership, which is really really
quite a big one for a lot of the investors
that we speak to. It also highlighted concerns about investability,
transparency and price discovery concerns as well as the absence
of an offshore currency market and onshore constraints. So there's
quite a few issues there that Vietnam knows it needs
to tackle if it wants to get onto that watch
list for MSCI. But having said that, it is also
taking some of the other reforms that have previously been
highlighted as necessary. So, for example, next year we're due
to see the establishment of a central counterparty clearing mechanism,
so that there was one of the that was one
of the big asks. And yeah, I think you know.
The perception is that the Vietnam is slowly making the
kind of steps of progress that the investors want to see,
but there still seems to be quite a way to go.
Super comprehensive report on what's happening these days with the
Vietnamese economy. Francesca, thank you so very much. Bloomberg's Francesca
stevens Our, Vietnam Bureau Chief, joining from Hanoi. I'm Doug Chrisner.
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. Monday morning, five am
Wall Street Time for the latest don markets, overseas, and
the news you need to start your day. I'm Nathan Hager.
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