Tech in Focus, A Conversation with Uber CEO Dara Khosrowshahi

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Welcome to the Daybreak Asia podcast. I'm Doug Chrisner. Tech is once again dominating the conversation in markets, especially as it relates to AI in Japan. Shares and soft banker trading higher on where the company is studying potential acquisitions, including the data center operator SWITCH. We are told SoftBank has held discussions with leadership at Switch and the company's

It was encouraging despite Oracles drop and holding the nastac back. I think, you know, there's definitely rotation. Value stocks are strong, small cap is actually leading, and you know, we didn't have a record in Nasdaq, but we didn't in the Dow and S and P. Also, the transports are at new highs they haven't been in almost two years, so it feels like a healthy market. The jitters are mostly in tech, just like you just said with Broadcom.

So are they justified though? I mean, if you look at what Broadcom had to say, EPs for the quarter was above estimates for the latest quarter. However, the outlook for revenue where AI is concerned, maybe did not meet the most lofty expectations. Do we need to discuss valuations here?

I think we can, because you know, tech is still priced to perfection, and US and developed markets in general are very very highly valued historically, right, So the talking points I sent you, you know, tell the story. Even though emerging markets have had a good year, they're still dramatically cheaper than developed markets, and US is really the tip of the sphere of developed market valuations.

So, Steven, if you're optimistic on the US equity market going into the new year, I'm curious about how much of that is predicated on much easier FED policy. Just the other day we had the Fed maintaining its outlook for just one rate cut in twenty twenty six. That despite the fact that the swaps market is sticking to the bet for two rate cuts in the new year. What is your view on the outlook for rates?

You know, I think they'll be a new FED president, and I think that will have some influence. The market reacted well to the you know, it was like a soft talkish kind of press conference by Powell. So I think I do think the market will be okay with either. I think the fundamentals of earnings and that the US economy is not as weak as people feared, even as recently as a month ago, is what's holding up the market.

So you mentioned emerging markets a moment ago. What's your outlook for EM in twenty twenty six?

Broadly speaking, So, obviously emerging markets are heterogeneous. Different markets show greater or less potential, but as a whole, the valuations in emerging markets are really attractive. The forward pe is about half of the US and developed markets. Cyclically adjusted PE or CAPE is also in the twelve to thirteen compared to twenty four to twenty five for developed markets. And then you look at some specific markets. Brazil has

Now, the direction of EM, as we know, often comes down to the relative strength or weakness of the US dollar. Today it was a story of dollar weakness, and the Bloomberg Dollar Spot index right now is on pace for its third weekly decline. If we can assume the dollar remains on the back foot, does that necessarily create more bullishness for you when it comes to EM.

Yeah, that is the case. Emerging market performance is generally helped by a weaker dollar as well as Emerging market currencies in general have been strong this year, and we've had a role reversal the fiscally responsible countries around the world. In general, it's more emerging markets than developed markets, so it is the market speaking about the relative health of emerging markets.

In my opinion, what's your biggest concern is we go into twenty twenty six.

To start their geopolitical concerns are not only not diminish, but they've increased. We now have the possibility of a hot war in the Caribbean as well as continuation of the Ukraine Russia War. I do expect the Middle East to be somewhat attenuated compared to the last two years. I believe the ceasefire will hold, but trade tensions will continue to be a factor. The US and China are seeming to signal mutual understanding and accommodation, so that could

So you've highlighted a few of the risk and given those risks, maybe you could address some of the more defensive or perhaps hedging strategies that you're using.

Right now.

Sure, well, as a global index provider.

We.

Encourage investors to use our indexes and make their own decisions, But what we really strive to do is create asset class choices for our investors. So, for example, gold and gold mining stocks as well as silver and silver mining stocks have been an excellent hedge this year. I do think the trends in metals and now coppers coming up are going to continue to be of value. In contrast, crypto has not added value to anyone's portfolios this year. It could be a good time to allocate just a

Steve will leave it there, Thank you so much. Steven Schoenfeld is the CEO at Market Vectors in dex Is joining us here on the Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. I'm Doug Krisner. Uber is looking for some new avenues of growth in the Asia Pacific, especially in Japan and Hong Kong, and the focus of the strategy will involve self driving cars. Uber CEO Derek Kasper Shahi is in the region. He spoke with Bloomberg's Annabelle Droolers.

It's been a very busy week for you today if you've been Japan, Korea, Taiwan, Hong Kong. What's doing this sort of standout so far? The key takeaways, well, the.

Key takeaways for US is growth the Apak market and in particular the North Asia markets as well. They are huge growth markets for US. And if you look, for example, in the rideshare business, over thirty percent of our global first trips coming into the category come from the Apak region. The area is growing very quickly, including taxi as well, which is actually one of our newest products on the platform.

Early this year you also put out a statement on the robot taxi push as well, and so the Middle East and Asia were the markets for twenty twenty five to launch, and we've seen of course that initial deployment in the Middle East already.

What's happening on the Asia side, well, lots of discussions. On the Asia side, I think what's really important is to set up a regulatory framework to go forward. For example, Hong Kong has various trials and pilots going on, and in many other markets, we're talking to regulators about how we can be a part of shaping ride share and autonomous ride shair going forward. The technol ology is absolutely

Where then, in Asia do you think is the most likely place.

We'll see I think that certainly Japan has great potential, you know, with.

They are behind on their regulation.

They are behind in their regulation, but I think that they also understand that with an aging population, there's a real need for transportation, not just in the large cities but in.

The rural areas.

And for example, I experienced that personally going to Kaga city and where we have communal rod share and kind of took a ride share trip and understood what the needs are there. So we're talking with various countries regulatory authorities. I think Japan is going to be part of it. I certainly hope that Hong Kong is going to be a part of it. Australia, where we were just talking about,

Speaking of Hong Kong, because we do see the trials that are underweight and they're being conducted by Baydu's Apollogo program. Would you be looking to work with them on that or are you working with them on that?

By Do is a partner of ours, so we partner with Baidun we ride for example in Abadhabi and expanding their ponies another partner of ours. So we absolutely expect to be on the road with all three of them. When you look at Chinese autonomous technology and the development there, they are one of the leaders on a global basis, and for us, we want to partner with a whole autonomous ecosystem to bring this technology to reality.

So, just to clarify, you're expecting to ramp up the markets that you're into ten autonamous driving markets ten plus yes by next year, and you anticipate that those could also come from the Asia region.

They could come from the Asia region, and they could also involve some of the partners that we talked about.

By do we ride a pony?

And if not Hong Kong, then where else? Do you think in Japan? As I said, it's really is behind on the regulatory.

Side, every major market in which we operate, we are having discussions with autonomous partners and then most importantly regulators as to how we can introduce autonomous either in a pilot way or within some restricted operational domain. You know, everyone wants this product. It's a product that's delightful in markets for example, in Atlanta, in Austin and Abu Dhabi.

Our consumers love the product.

They feel safe, and this technology is hitting primetime now in every major city in the world.

To be a part of that.

Revolution, I do find it interesting by in particular with the Apollogo program, because they are conducting the trials here, they're already starting to remove the human drivers across some of their markets in mainland Shiner and the way that you can get a buy to apologo ride in mainland China is often through a buy do control platform. Do you see that risk of them maybe pursuing that strategy here instead of teaming up with you on it.

I don't think it's going to be black and white in terms of the strategy. I think that there could be many hybrid approaches, and you know, I compare it to the food delivery business. For example, we work with Starbucks or McDonald's that has a direct app and customers go direct to get the food there. At the same time they also participate in the marketplace. So I think

Let's talk about the US as well, because you're partnering there with Weimo as well in certain cities. Perfect partner, Yeah, terrific partnering. Actually in the latest earnings, I think you said excellent as well. But in some places, Weimo is expanding into new cities without you and becoming a direct competitor. And that's something that was highlighted even by Webbush earlier this week as being a potential risk for your business next year. How are you assessing that.

Well, I think it's the same example that I gave you that in some ways the McDonald's app is a competitor to Uber Eats and the two can coexist. And it's very very early in the development of autonomous we have to make sure that we have access to autonomus technology in the major cities that have the right regulatory framework to allow autonomous and we're very confident as we look at our roadmap and we look at our partners.

When you say access to twenty different partners, do you think that that is the way that the industry will continue to evolve or do you expect consolidation on the robotaxi side as well, or the autonomous driving software.

Side we're seeing is this is a trillion dollar plus market in terms of autonomous mobility. I think delivery eventually will be of a similar size. And when you have markets that are that large, you usually don't have winner take calls.

It's the same way with these LLM models.

There are many to choose from, whether it's an open AI or a Gemini, and I think the same will be true of autonomous It's an exciting technology, but there are many players getting to the finish line. We just have to make sure that the players that we work with are safe and that again we're working with the regulators in constructive manner.

Part of the strength of Uber, of course is your data mode and just how much information you're collecting on users and in the rise they're taking and their behavior patterns. But other competitors in the market, like Way more like Tests are still continuing to build up that infrastructure as well. So how secure do you see that data mode being?

Well, there's nothing secure about the technology space. There's always innovation, and so we just have to move fast and isay. Actually the more important factor in Uber is our global coverage. We are operating in seventy countries. The demand that we're bringing every day, We've got millions of consumers opening our app all over the world, and we can point that demand not just to our current driver partners and delivery partners, but as autonomous comes in to autonomous partners.

You know, these are.

Very expensive cars, it's a very expensive technology, and you want to amortize the upfront, spend it as many transactions as possible. And Uber certainly is the leader around the world in terms of the demand that we can point to our autonomous partners.

Yeah, when you talk about a capital and just general capital raising plan, an interesting move that you made earlier this year was raising one point two billion dollars by selling those exchangeable senior bonds linked to your stake in Aurora for a few details in that one, but do you see yourself doing that again in twenty twenty six something similar again just to it was really seen as an innovative and creative way I guess to raise money.

Well, we have a very creative team. I think the good news for us is we're now free cash flowing close to ten billion dollars, and we expect that to increase substantially over the next couple of years. So through a combination of the substantial free cashroow that we have and also monetizing some of the equity stakes that we have in other companies. Now it's over ten billion dollars.

You're well capitalized. That's sort of taking away from that, But would you look to do something similar with your stakes in DD and GRAB in particular.

I think we'll be opportunistic.

Certainly, we love GRAB and it's a strategic partner of ours. D D of course hasn't gone public yet, so to the extent we have an opportunity, we will look to. You know, we call it recycling the investments that we've made. But at the same time, we don't need to do that because the company continues.

To throw off cash flow. We have a lot of options ahead of us.

I want to talk about also the sparsa geography's strategy and the importance of that. Can you maybe spell it out a little bit for people exactly what you mean by that because it is interesting, as you make sort of a push into lots of different centers, it actually seems to be less the centers that are doing well for you as a company.

Well, the urban centers continue to grow. But I do think that we as I reflect on Uber's growth, we used to be a big city company, and what we're seeing is there's enormous demand for both mobility and delivery outside of the large cities, in the more sparse markets, the suburbs, et cetera. And our growth in the sparse markets is anywhere from two to three times faster for mobility and delivery than in the big urban markets, even though the urban markets are growing at the same time.

What do you make then for India in particular, because of course you big competitor there is rapid of and then they've been very successful with a slightly different operating model, but including going down into the lower tier or solar tier cities, how do you also stay competitive there? And does that sparse a geography strategy also fit for India?

Yeah, very much so so with India.

Really the fastest growing part of the Indian market is two wheelers and three wheelers, and the business man is different. Actually it's not a commission model, but it's actually a subscription model as well. Rapido's a real upstart there, but over the past months we've been pushing back against them, and India continues to be a hugely promising market for us, so we're very happy about the recent results that we're seeing.

That is Uber CEO Derek Koswershahi speaking with Bloomberg's Annabelle Droolers in Hong Kong 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 story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore