[music]

Bloomberg Audio Studios podcasts radio

news.

Welcome to the [music] Daybreak Asia

podcast. I'm Charlie Pallet. Doug Krer

has the day off. Asian shares eased from

records. Oil held gains as efforts to

revive a peace deal with showed little

progress. Even as the AIdriven rally

continues to propel equities to records,

financial markets have been whipssawed

by geopolitical headlines after an

escalation in Middle East hostilities

jeopardized peace negotiations. For more

on the markets, we heard from William

Cells, global CIO at HSBC private bank

and Premier Wealth, and he spoke to

Bloomberg TV hosts Paul Allen and Heidi

Strad Watts.

>> I want to start off on that tech theme.

I mean your most recent report talks

about the importance of investing in an

AIled future but if we drill into that

what does that mean specifically? Are

you buying chip makers? Are you buying

ASML energy stocks? All of the above or

is there something else in there that uh

that investors should be looking at?

>> All of the above. um you know we need to

invest in in that um you know the the

ecosystem um which is of course um AI

chip makers but also the enablers as

well as the adopters but I think it's

very important to try to at least have a

little bit of sector diversification and

style diversification by also going to

the rest of the ecosystem which feeds

that i.e. the energy um the energy

security theme. The reason why we call

it energy security is of course because

of the conflict and even the Russia

Ukraine war as well. We saw that um you

know countries want to invest in um that

energy independence and of course the

demand for energy is further enhanced um

you know by AI. Um so that's important

um because so much of the economy and of

earnings is driven by AI that you don't

just want to be in one single sector.

Uh just getting back to that all of the

above theme, we we heard from Jensen

Huang yesterday. He was talking about

software companies and how they won't go

out of business because of AI. He said

it's actually an incredible time to be a

software company. Do you buy into that

narrative?

>> Well, we see that for example in the

hiring as well. So amongst economists

there's a lot of discussion as to

whether um um you know people will be

laid off at this point in time. there's

actually a lot of demand um you know for

software developers for consultants as

well who can install that AI into um you

know into the corporate sector. I think

within the software business it's very

very important to try to to

differentiate. There are indeed some

businesses that don't have the modes

that don't have the competitive

advantage visa vi but there's a lot of

them that are very well integrated with

their clients that have a lot of

proprietary data and therefore it's very

difficult to push those out of business.

They are going to do very well. They

they need to be integrated and they can

be enhanced as well um in their

capabilities by AI. They're not just a

potential casualty. they can also

benefit um you know from that AI to make

their software more powerful.

>> But there's obviously a huge wave of AI

and big tech IPOs and deals that are

almost upon us. We've had Anthropic

having that first mover for IPO Edge by

filing first, OpenAI to come. We had the

big fundraising from Alphabet and Google

overnight as well. Uh and SpaceX, how

much interest do you think there's going

to be when it comes to your clients? uh

for being able to get access to these

deals.

Yeah, there will certainly be interest

but I think there is a lot of

speculation in the market about whether

this would hurt the index overall

because of sort of a supply um you know

effect vacuum cleaner uh effect as some

call it um you know historically these

the impact on the market tends to be

very very small if you look back at very

important uh IPOs also it's important to

look at the free float right um you know

which is a which is a small uh section I

think a lot of those companies have a

different risk profile

um you know than the Magnificent 7. So

it's not necessarily a one for one um

you know and and and comparable. So

people won't necessarily take money out

of those Magnificent 7 or other stocks

uh to go to go into that. Um so I think

the the the AI will need to be driven

higher by those earnings. So as long as

you believe as we do that more and more

companies are installing that more and

more consumers are um using it that uh

companies are monetizing it um you know

through subscription advertising and

others um you know that that earnings

tailwind um you know will continue to

drive up um you know the sector

>> there is that risk in terms of being

first to tap the market that that test

of particularly the US market for for

depth for liquidity for the investor

appetite that you allude to and I'm sure

that's the case when it comes to Asian

investors as well, right? Do you think

in the short or medium-term there is

that risk that some of that

[clears throat] interest will get sucked

out of other assets and other names and

should we prepare for some volatility?

>> So, I think there's still a lot of um

liquidity on the sidelines. I think the

initial IPL will uh will not be big

enough or um to to to drain the

liquidity out of the market and the

question is obviously do you get

secondary um you know deals as well and

more um of of of those stocks coming to

the market that free float um increasing

but I think there is that liquidity in

the equity market there's the liquidity

in the bond market as well but one thing

that I would say is that of course we

can't just talk about the tailwind of AI

we also still have the the cyclical

headwind wind from the uncertainty

around um you know the Middle East. What

I think that will do is lead to market

to market volatility not an equity

market correction but we have to be

fully prepared for um you know the odd

inflation or growth number um or

illustrations from companies that their

supply chains are being interrupted um

to lead to some mark to market

volatility. we are at with the treasury

at a level where um you know what we

call the danger zone where um that that

that treasury level when you get more

volatility that then feeds through into

equity market volatility. So people need

to prepare for that but they need to be

continue to be exposed to the market

upside and how do you balance those two

things well by building resilient

portfolios with gold with treasuries

with hedge funds with alternative assets

and by trying to have some sector

diversification as well.

You mentioned a few volatility factors

there. I want to inject one more

potential risk to this bull run. Where

do you place the chances of a Fed rate

hike before the end of the year?

>> Uh we don't have a Fed rate hike pencled

in and to some extent that is um because

uh in in the US um the um you know

natural gas prices for example have gone

up much much less than in Europe. So the

effect that you see around the world is

is is differentiated. Um the other thing

obviously is that the Fed looks at both

um inflation and net growth. So at in in

our view you don't get that Fed rate

hike. Um and that obviously to some

extent is an anchor for markets if we're

right about that. Um and probably one of

the things that that that that helps the

market have that resilience as well that

we see um at this current stage. William

Cells, global CIO at HSBC private bank

and Premier Wealth, speaking to

Bloomberg TV hosts Heidi Strong Watts

and Paul Allen. Up next, we'll take you

to Taipei where Computex 2026 is

underway. That's coming up on the

Daybreak Asia podcast.

[music] Welcome back to the Daybreak

Asia podcast. I'm Charlie Pellet. Doug

Krner has the day off. We take you to

Taipei where Computex 2026 is underway.

It is Asia's largest tech showcase. CEOs

from the world's leading technology

companies are gathering to discuss the

outlook for AI, robotics, and chips.

This is where we had the chance to speak

to Craig McDonald, ABB Robotics business

line managing director, Robot

Industries, and he spoke to Bloomberg

Steven Angel. So, how is AI being

infused? I mean, Jensen Wong and

everyone else here from Qualcomm CEO all

talking about agentic AI as the next new

springboard for the adoption and

investment and profitability of AI. How

is agentic AI being infused into a

traditional industrial tool like you

have that's been around since the 1970s?

>> How is it being improved?

>> So, I mean ABB started uh in robotics in

1974. I think we we were the first to

introduce the microprocessor controls

into the robotic space. Um, and over the

the next 50 years, we've come up with a

very wide range of industrial,

collaborative, and mobile robots. Um,

and we spent probably the last 20 years

evolving that system now into robots

that can operate more autonomously and

versat in a more versatile manner. So,

think of robots with intelligent eyes. I

think of robots with with a with with

hands and ability to manipulate and also

think of robots uh that now have a

brain. But these are evolving to a point

where ultimately um simulation becomes

more and more important because you're

merging so many different technologies.

The ability to create hyperrealistic

synthetic data to recreate these

environments is truly bringing these

technologies together and is really the

next step that we're working on. So how

are you then as well partnering with

Nvidia because Nvidia stole all the

headlines yesterday no doubt with their

new laptop to take on the likes of Intel

and AMD but of course we all know that

they have the orchestra architecture to

go into those big data centers uh and

they have the new infrastructure with

Vera Rubin in full production right now

but you also use Nvidia in a way to sort

of virtually uh game out a scenario for

a client virtually so they don't have

necessarily have a physical prototype.

Tell us about that.

>> Yeah, so if you look up until now,

synthetic data generation hasn't been

accurate enough for robotics. Um, many

of these applications are 50 to 60%

accurate. And when it comes to systems

that need to operate safely at speed and

at scale in an industrial hardened

environment, it hasn't been achievable.

Um over the last uh year and a bit and

we announced in March our collaboration

with Nvidia, we've really merged their

capabilities in accelerated compute and

their abilities with wide world

simulation with our industrial

knowledge, our digital twin capability

and of of course our robotics to address

the sim to real gap.

>> Yeah. And uh in a number of uh

applications most notably in the

electronic space we managed to shrink

that syntoreal gap to to a very very

close correlation. So we can with a 99%

accuracy now recreate robot motion in

the virtual space when compared to the

real space.

>> So what kind of cost savings are we

talking about and also more importantly

perhaps is time to market.

>> Oh absolutely. I mean you can now

reimagine how you bring product to

market. So think if you're sitting in

Taiwan right now, you're designing a

product here, you're having to apply it

in China, apply it in India, apply it in

Vietnam. Um you need to be able to in a

concurrent way generate those production

systems, but also train them for all

these manufacturing edge cases so that

you can then concurrently engineer

taking probably about 50% out of your

time to market. uh but also at the same

time take about 40% of your total cost

out because from day one you pre-train

for all those manufacturing edge cases

so you can hit productivity much more

earlier than traditional systems. So

through this or just the big uptick

obviously in physical AI, how are new

installations for you guys looking this

year?

>> I mean it's the electronic space

specifically is going through a super

cycle. I I think there's there's been a

lot of activity on the consumer

electronics side. Uh but also more

recently um the the AI compute side has

got to volume levels that have justified

robotization. Many of these systems up

until now were only partially automated

because of the lower volumes compared to

the consumer electronics. But I think

you've all seen the headlines on data

centers and how that market is growing

exponentially and with that comes the

robotization of that space. What's your

strategy for China? Because they have

their own infrastructure and their own

indigenous innovation in robotics. Uh

yes, I I've seen a lot of automobile

factories with ABB robots. No doubt

they're going dark factories and the

like. But again, I think the cost basis

because of their stem to stern supply

chain is about 40% of what I mean,

you're at the high end really ABB. But

what is your strategy for China as they

go up the value chain on their

industrialization?

>> Oh, absolutely. I I think China is is

50% of the world's robot market if you

look at the IFR data. So, they are

obviously the dominant player in robotic

automation from a market perspective.

And we've been there for the last 20

years. We built our main uh one of our

main production facilities in China and

we've got a long history of helping

Chinese system integrators and the

ecosystem there evolve and become more

robots capable. Now there's no doubt

it's a competitive space. Um but at the

same time we are deeply present in China

and we are also using I think the the

the deeply integrated supply chain on

the cost side but also on the system de

deployment side this ecosystem of

fantastic value providers to come up

with many of these solutions we're

active there a number of different uh

parts makers in the whole IT supply

chain are talking about key component

crunch right now I mean and prices

obviously for memory is going way up.

How is that impacting you? What are you

seeing?

>> No, I I I think um in in in the global

market of robotics actually we've seen

for the last few years, we haven't seen

exponential growth in the robotic space.

Um so we haven't quite seen the same

pressures on supply chain that you might

have been seen coming from say the

comput side in electronics

>> yet.

Now definitely it's something to keep a

close eye on. Um the the good part is as

we went through the co time we reilled

many of our supply chains to become more

resilient to possible supply chain

shortages. So this resilience certainly

we believe is going to stand us in

goodstead should there become a tighter

supply market.

>> Could that be exacerbated by the

exponential interest in humanoid robots?

I know you do industrial robots

primarily. You do have a division I

think called me uh which is looking at

sort of cobots.

>> Absolutely. Yeah. So we we we are active

in the cobot space. Uh but also we've we

are very active in trying to make our

robots more intelligent and essentially

utilize many of the characteristics that

you see out of a humanoid. We just

haven't seen the volume application of

the humanoid form factor in the

industrial space. We've seen a slightly

different form factor. We see

>> it's not as necessary, is it? Unless you

need dextrous hands um for sorting and

things like that in warehouses, right?

Yeah. Yeah. It it's not um but you can

still achieve that dexterity by putting

your robot platform on wheels and you

can come up with much higher payloads.

Now some of these technologies from

humanoids are great but when from a

supply chain perspective we're not

seeing those volumes and those volume

use cases yet impact our supply chain.

Craig McDonald, ABB robotics business

line managing director Robot Industries

speaking to Bloomberg Steven Engel from

the sidelines of Computex in Taipei and

we are bringing their conversation to

you here on the Daybreak Asia podcast.

Thanks for listening to today's episode

of the Bloomberg Daybreak Asia edition

podcast. Each weekday we look at the

[music] stories shaping markets,

finance, and geopolitics in the

Asia-Pacific. You can find us [music] on

Apple, Spotify, the Bloomberg Podcast

YouTube channel, or anywhere else you

listen. [music] Join us again tomorrow

for insight on the market moves from

Hong Kong to Singapore and Australia.

I'm Doug [music] Krer, and this is

Bloomberg.