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This is Bloomberg day Break 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, a look ahead to some key housing data, plus a look ahead to corporate earnings from evmaker Rivian.
I'm Tom Busby in New York. I'm Stephen and Carol in London. Borg counting down to a crucial election in Europe's biggest economy, Germany.
I'm Doug Chrisner looking at upcoming earnings from China's Ali Baba, along with upcoming eco data out of South Korea.
That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg eleven to three, Yeero, New York, Bloomberg ninety nine to one, Washington, DC, Bloomberg ninety two to nine, Boston, DAB, Digital Radio, London, Sirius XM one twenty one, and around the world on Bloomberg Radio, dot Com and the Bloomberg Business App.
Good day to you. I'm Tom Busby, and we begin today's program with some key housing data out this week. January housing starts on Wednesday. Existing home sales for that same month on Friday Now for more on what do you expect and look at the housing sector right now, we're joined by Drew Redding, Bloomberg Intelligence, US home building analyst. Well, Drew, last month brought brutally cold temperatures across much of the US,
those devastating wildfires in Los Angeles. Is there any good news, any green shoots we can look for in new home construction and existing home sales for January?
Well, thanks for having me. It's a great question. There have been a lot of different forces at play. I think the market's looking for something about down seven percent for housing starts this month, and we think that that starts going to remain valuable for the next couple of months. And the reason is that the large public builders are matching production levels with demand. Given what's happened with rates, the expectation for volume growth just not as strong as
it was a couple of months ago. And you know, when we looked at demand in January, it's actually weaker than the typical seasonal pattern you would see. So you know, we're seeing builders be a bit more cautious on a relative basis. We still think that the large public builders will see stronger growth compared to their smaller peers who continue to struggle with, you know, the availability and cost
of growth capital. Because you have to remember a lot of time this group is looking to regional local banks for financing. In an environment where there's a lot more uncertainty, it's certainly tougher to get access to that. In terms of existing home sales, we think we're going to continue
to see sales be pressured in the near term. You know, again, we've had rates back up where I think seven point one point five percent now, prices continue to rise across much of the country, and you know, there's just not a lot of urgency right now.
And are these builders you're talking about also having problems or or fear of problems getting enough workers. I mean, I know skilled labor is hard to get, but any workers with the threat that's coming out of the White House and deportations. Also land, you know available land. Is are they not building spec houses? Is that sort of what you mean by you know, you know, just building on demand.
Well, that's a great question on the labor front, because the inability of builders to get access to the trades has been an issue for much the last cycle. Now over the last several quarters, we've seen that improve. You know, part of the reason is because the last couple of years we've had the largest influx of immigration on record, we've also had slowing demand, so the trades have kind
of been able to catch up with production. But you know, in terms of immigration policy, it's certainly a real threat to the construction industry. You know, of course, we still don't know exactly how this is going to play out, but it's not a secret that farm bar and workers representing a significant portion of the US construction industry. I think that the NHB estimates that it's about thirty three percent of the trades, but as you would expect that
very significantly by market. So if you look at somewhere California, Texas, Nevada, and Florida, you're talking about closer to fifty percent of the workers being farm born, and there's some estimates out there that you know, about one and ten are undocumented.
So wow. You know, like I said, it remains the spe seen how this play out, but we certainly think that, you know, builders could have an issue getting products built, and certainly we would expect to see COSS rise in the event of some type of you know, large scale deportation program.
Wow, a lot of a lot of uncertainty. Well, right now, it's the middle of February, just ahead of the busy spring housing season. And speaking of uncertainty, you mentioned home prices at or near all time highs mortgage rates around seven percent, uh, the President's agenda. Where does the whole industry stand right now? The home builders and new home construction.
Wells, we're still definitely dealing with the soft market. As you mentioned, affordability is near historically low levels, so we're
seeing that that impacted demand side. We looked at some of the latest data for Redfin on the pending home sale side, and it's showing that from last month we're down about four percent, we're down about six percent from last year, and on an absolute basis pending sales, which are kind of a more current reflection of the demand environment because they're contract signings, we're at the lowest level
on record. The data is also showing that we're starting to see more deals start to fall through, whether that's due to qualification issues or buyers getting cold feet, you know. Broadly speaking, we think, you know, on the existing home side, we're probably hovering around trough levels. The question is when
does that start to turn. You know, we think we can finish the year in positive territory, but you have to remember that we're coming off the lowest level of volumes in multiple decades, so certainly still a challenging market, and we're seeing that in both the resale side and the new home sales side.
Yeah, and another troubling stat you mentioned redfin They say more homes are now getting listed, many for the first time, but they're staying unsold for the longest stretch in five years. Again, the unaffordability of so many of these homes and a seven percent interest rate's like a one two punch. That's not helping at all.
Yeah. I think the average time on market is getting close to two months, So, you know, the inventory dynamic has been something that has really supported the builders over the last couple of years. You've had a lack of for sale inventory in the resale market, which funneled demand towards the builders, who are then able to offer incentives
and rate buydowns to make the payments look better. But now we're in a situation where that competitive environment is really starting to change with active listings across many of the key markets now well above twenty nineteen levels, and you know the ones that come to mind are in Florida and Texas. So builders are now having to face competition that they really haven't had the last couple of years, and we think that could put some pressure not only on volumes but also on pricing.
Well.
January housing starts out on Wednesday. Existing home sales for January out on Friday. Our thanks to Drew Reda, Bloomberg Intelligence US home Building analyst. We move now to earnings from high end EV maker Rivian, which reports its fourth quarter results this Thursday, as it readies big plans for the future. For more and what to expect, and a look at the broader ev auto sector. We're joined by Steve Mann, Bloomberg Intelligence Global Autos and Industrials Research Analysts. Steve,
thank you so much for joining us. Thanks Well, let's begin with what you expect to see in this earnings report. What were sales like for Rivian? How did it do against Tesla, Lucid, GM, and Ford.
Well, Rivian actually had better than expected sales in the fourth quarter, so we do expect the company to actually report positive gross margin in their auto business, and that's something they've promised for the last three quarters and I think they will be able to achieve that. They've done a lot of changes internally in their factories and their
product to get there. So and lastly, hell on high water, they have to hit gross profit because you remember they do have a partnership, a joint venture with Volkswagen, and for the next billion dollars that they're going to get from Volkswagen, they have to hit that gross profit target.
Now that is a big boost anyone would take the billion dollars from the world's second largest automaker. But it's also facing a lot of uncertainties, or at least the EV industry in the US with Donald Trump back in the White House. Yeah, not only the tariffs, but you know, he revoked the EV mandate of fifty percent cars sold by twenty thirty all evs, the federal tax credit up in the air emission standards I mean, is rivian, and the whole industry really facing more challenges than ever before.
I think there's a lot of noise out there. I think there's going to be ups and downs in any any market, especially you know, auto market is not immune to that. I think, you know, there's a lot of risk in terms of concerns about auto sales if the seventy five hundred tax credit goes away. There's also tariffs, you know, the ux Mexico Canada tarriffs may make may come on online, the twenty five percent tariff, and that
could impact the auto industry. I mean, I think the tariffs on the supply chain won't impact Revian that much. They've have been vertically integrating their process and some of the changes that made that they made in the middle of twenty twenty four really brings all out of production in house, so they may not get hit that much on tariff's. But the seventy five hundred elimination of the semi five hundred tax credit will probably temporary subdue h
EV sales. You know, it does make EV's a little bit more expensive for the consumer, But look, Rivinan is going to launch a cheaper model later this year, uh and then a new and even cheaper model into in twenty twenty six that will expand their their their market and hopefully make their vehicles even more affordable for the average consumer.
Well, speaking of expanding, I mean, Rivian is thinking big, not only these new models, not only the partnership with with Volkswagen, but in the last remaining days of the Biden administration, it secured a six point six billion dollar loan resuming work on a new assembly plant outside of Atlanta. I mean that's big. Thinking that is huge.
I think it's really positive for for Rivian because you know, Rivian still not positive on the bottom line, so they you know, and they have negative cash flow. So to have that backstop, you know, for their new plant that it will be it's really positive. But look, I think it'll be a miss if Rivian decides to go ahead with the construction of that Georgia plant now, I think they're going to have to wait. They should wait. They have the R two smaller suv coming up cheaper, and
then the R three and twenty twenty six. I think they should wait until gauge the customer demand for those two vehicles before they go ahead and starting building a new plant. I think, you know, if they do spend that capex now, it's going to be a higher cost for the automaker, at least on a per unit basis,
and they don't need that right now. So it's great that they have the money, but I think it'll be uh, you know, I don't think the investors will look at this positively if they decide to build the plant.
Now I see now, up until now, it's bread and butter from what I see, has been this deal to supply delivery trucks to Amazon. I mean tens of thousand that I see them everywhere here in New York. Now that deal has expired. So what does that mean for Rivian?
Oh, it's really positive. It's it's a small business for them right now. It's it's kind of you know, the the impact to the bottom line it's immaterial, but the upside, you know, it's he's huge because you know what really makes sense for evs is these short hauled delivery trucks, right and you know they have to you know, they're
selling to Amazon. But you know we've also heard that there they've been talking to AT and T, and AT and T are currently testing vehicles, their service vehicles from Rivian. So it opens up a door for a bigger market for for Rivian's technology.
Well, that's great.
Rivian Q four earnings out this Thursday, and our thanks to Steve Mann Bloomberg Intelligence, Global Autos and industrials research analyst coming up on Bloomberg day Break weekend to look ahead to the upcoming German elections. I'm Tom Busby and this is Blue. This is Bloomberg day Break weekend, our global look ahead at the top stories for investors in
the coming week. I'm Tom Busby in New York. Up later in our program, we look ahead to earnings from China's biggest player in e commerce, but first German said to the polls this week, with issues like economic growth, domestic security, irregular migration, all on the ballot. Now for more, Let's go to London and bring in Bloomberg day Break Europe banker Stephen Carroll.
Tom According to the latest polling, the conservative Friedrich Martz of the Christian Democratic Union is the front runner to emerge as the next leader of Germany. Time is fast running out for the incumbent Olaf Schultz and his Social Democrat party to close the gap between them and their opponents, currently about fourteen percentage points wide according to an average
of recent polls. Maybe some indication or consensus about the expected results, the path to stability in Germany remains uncertain. The recent bad blood between the mainstream parties, which was on show during a televised debate during this campaign, has sparked concern that it might prove more difficult to negotiate a coalition agreement after the election, a process that can
take several months. Navigating the uncertainty as an investor in Europe's largest economy is something that I've been discussing with Eliz Badoi, whose City Group's Global markets managing director and head of EMEA Research, who does see a potential upside to the results if all goes to plan German elections.
On balance, there hasn't been as much focused globally on them, but obviously there are a positive catalyst for the first time. We could hear about the regulation, we could hear about boosting spending defense, depending on the outcome and the various coalition we might get. Now, of course there's always a risky selections that we get an extreme party blocking some of that, but I think on balance we think seventy five percent of the potential outcomes of market friendly.
So that's one thing that with City.
Groups, Ali's Badoye. They are speaking to myself and Valerie Titel. So what's in store for Germany over the final week of campaigning. I've been discussing this with our Germany correspondent to Oliver Krook.
Yeah, listen, I think what is sort of most remarkable, the most remarkable future of this election campaign is that basically the polls have not moved a whole lot, no matter basically what has happened since the sort of snap election was called. It teams that basically everything is kept steady.
And that's really in very sharp contrast to what we saw during the last federal election in twenty twenty one, where basically the CDU had been leading by like twenty three points, gave up that full lead and then was not in the government at all. So what we're seeing now is the CDU basically holding up at about thirty percent.
Remember this is Angela Merkel's traditional party now headed by Frederick Mertz, with the AfD the Alternative for Deutschland, the far right party that wants to leave the Eurozone, very hard on immigration, they're twenty percent, and then ESPD, you know, the Chancellor's current party, the current Translort party, holding in about fifteen sixteen percent, and the Greens right after that.
I mean, what I think is very sort of interesting though, is perhaps a different feature from this election from the others, is that all the people that you sort of speak to, many of the people that I speak to, when I ask them who they're voting for, most of them, I will have to say, will say they don't know who they're going to vote for. So basically they're considering are they going to vote with their conscience? Are they going
to vote more tactically. This is going to be a sort of big question, and it's hard for me to say, because the polling is one thing. What people will actually do on the day of the election that could cause a real sort of discrepancy to what we've generally seen in German elections where the polling has been fairly accurate.
What have been the key moments of the campaign so far?
Yeah, I mean, I think that the sort of first key feature of this election campaign is just the presence of the AfD, the Alternative for Deutschland, as the sort of far right wing party, as a serious political presence. They hold, you know, basically a fifth of the vote in this election that has not happened since basically post war Germany, and they are in many ways setting the tone for a lot of the debate, certainly on immigration
and some other economic policies as well. I mean, I think another sort of of the sort of key moments was basically the equestins around whether or not olaft Guilt would be the candidate for the SPD going into this election. He obviously was very damaged by basically his last term that was cut forward because this basically coalition couldn't get along, They couldn't figure out how to solve a lot of problems, and it eventually brought the government down, calling for an
early election. And I think that the sort of final point that I think has really been significant here is basically the CDU and Frederick Mertz, the sort of center right party, voting for the very first time on this immigration bill in the same direction as the AfD, the alternative for Deutschel on that has never happened basically in post war Europe where you have a mainstream party voting with the AfD. He has said that this is not really amount to working with them. He has ruled out
working in coalition with them. But for much of the political system here within Germany was seen as sort of breaking the far right firewall and really sort of sundering that that taboo, and for many people that made you know him potentially untorre strustworthy and ineligible to be the candidate. Others say that, you know, he's just being practical and he's dealing with an intensely fragmented political landscape here in Germany.
This concept of the firewall is really central to the political conversations happening in Germany. And as you say that moment with the CDU putting forward this motion the Bundestag that you know, although condemning the AfD in the motion itself, did ultimately end up using some of their votes. How thinking about what happens post the election, how intact is that firewall now? Is there a chance that any of these center parties could end up doing work with the AfD?
Listen, I think I don't think that there's going to be anything that they're going to be able to do
in terms of formal coalitions. But again, I mean, Frederick Mertz was testing the water and at the end of the day, what he is dealing with is a real political problem within Germany, which is the fact that you basically have this massive fragmentation, you have basically, you know, As you get closer to the election, you know more and more of this vote being sort of spread across several different parties who have very very different, sort of out of different sort of views of the world and
how to deal with problems within Germany. And the reality situation is they're very unwilling to compromise it.
And this is the issue.
So you have the CDU basically won't compromise on the debt break, the SPD, won't cut social benefits, the Greens shut down nuclear power in the middle of an energy crisis. This is not a sort of situation in which the mainstream parties are able seemingly to get along and make some sort of sacrifices in order to get things done in Germany. And that is exactly the fact that the AfD is exploiting, saying basically, the mainstream parties have failed you.
Let's think about what happens on Sunday, the twenty third of February, when we will get polling day, but also when we will get the results of this election. Talk us through what happens when the results start to come in at polls close at six pm local time, will get exits polls almost immediately on that what happens next?
Yeah, so that's what happens basically six pm.
You get these exit polls, You get sort of sentiment from people being pulled, that walked outside of the polling station, from the TV stations. That tends to give you a pretty good steer on when things sort of how things will pan out, and basically within the hour you have a pretty good idea of what the outcome of the
election is going to be. So the main thing to look forward here too is if you actually don't get a huge sort of move in, what the sort of pulling for the main parties are Actually what's going to be most important are the parties that got the least number of votes, Because for every party that gets under five percent of the vote, they basically get knocked out of the Bundestag, and that basically rewrites the whole arithmetic of what more than half of the parliament will look like.
So let's say three parties get knocked out, then suddenly that's twelve percent of the vote that's no longer part of the party. That means that potentially you could get a coalition with two parties where previously you will have needed three. So this is going to be some of the sort of nitty gritty that we get into on the election night and really talk about and looking at
basically what this next government's going to look forward. But I also think that there's going to be sort of this dawning reality that a certain point that these mainstream parties within Germany will have to learn to commise otherwise the next election is going to be a very different one. And I think that there are some ways in which the AfD has grasped in ways that many other parties in Germany have not grasped, the sort of new politics of twenty twenty.
Five in that complicated negotiation that will happen after the election. Germany is used to having coalitions in government. It's also had a coalition of those two traditional centrist parties, the SPD and the CDUCSU as well in the past. Who are the other candidates that could be in focus form of thinking about potential coalition building? What are the parties should we be watching?
Yeah, so listen.
I think it's interesting that there's basically only been one absolute majority in Germany since the end of the Second World War. I mean, this is basically a nation that really is built on building coalitions. I think that the other parties that you're going to have to pay attention to are the Greens. They're the ones who are likely to come into to the sort of fourth place potentially, So there could be a scenario in which the CDU actually would prefer to work with the Greens over the SPD,
though they may be slightly farther on some issues. There's a lot of bad blood right now between the SPD and the CDU, so that is going to be absolutely key. I mean, there's the FDP, the Liberals, who are basically natural sort of mates for the CDU and the center right. You know, they're sort of into sort of fiscal disciplines, deregulation, a little bit more progressive socially, but they're not really going to be They're gonna be potentially a marginal player.
They could maybe be a third party within that. But I think the big concern here, Steven is that basically you get a situation in Germany where you don't have a decisive outcome and you just have general European limping in terms of political progress economic progress at a time when the United States is really sprinting ahead and basically leaving everyone behind and saying basically, you need to sort of walk to the beat of our drum, and really
what you need are stronger European nations, particularly when you need to sort of bring the European project closer together in order to compete with the likes of Donald Trump and of course China.
Yeah, because of course whoever is chancellor in Germany will also play a key part in the decision making process that happens in Brussels as well. A word on the economy and all of this, Oliver, you know, two years of negative growth in Germany. How central has that issue been to the campaign?
Listen, I think it's basically the fundamental issue. I don't know that it's the one that's grabbing the most headlines. But again we're just to put into context what we're talking about here in Germany. It's a statistic that I think bears mentioning and repeating and repeating. We are looking potentially here, particularly with if we get tariffs on German industry from the Trump administration, that would almost guarantee another year of contraction in twenty twenty five. That would mean
three years of consecutive contraction. That has not happened since the Berlin wallfell in nineteen eighty nine. This is a very difficult period for the German economy and that is what's behind so much of what is going on here.
And I think that it is partially also why there is so much vulnerability within the German society, why there's so much vulnerability of feeling around that, and of course often the impulse towards that is to be very concerned with how much money you're spending, yes, but also on immigration and partially what is driving the conversation around that.
And I think that that is basically and there's no way of ignoring that in a Nathan that has been very, very wealthy for a very very long period of time and whose economic model is now basically failing and is
only going to catch increasing headwinds. The question is going to be in this election it do sort of people realize, do the politicians realize the scale of what's going on, and are they willing to take very sort of potentially deep cuts to the welfare state, potentially look at taking debt and breaking the debt break and looking to basically boost the economy in that way, And that honestly I
don't know the answer to that question. It may not be bad enough quite yet for the Germans to take those steps that many think are absolutely necessary in order for Germany to stay relevant into the twenty per century.
My thanks to Bloomberg's Oliver Crook speaking to us from Munich. Well have full coverage of the upcoming German elections on Bloomberg Radio. I'm Stephen Carolyn London. You can catch us every weekday morning here for Bloomberg Daybreak here at beginning out six am in London and one am on Wall Stras Tom, thank you, Steven.
And coming up on Bloomberg day Break Weekend, we look ahead to earnings from an e commerce giant. I'm Tom Busby, 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 Tom Busby in New York. Earnings out this week from China's biggest player in e commerce, Ali Baba. Let's get to Daybreak Asia podcast host Doug Krisner for a preview.
To Ali Baba. Stock has been on a tear lately, so farthes here. Baba's Hong Kong listed shares are up more than forty percent. So what's driving this price action? Let's find out. I'm joined by Bloomberg's Katherine Lim. She is a senior consumer and Technology analyst for Bloomberg Intelligence, joining us from Singapore. Catherine, thank you so much for
making time to chat with us. Let's talk first about the macro story in China, because I know that Ali Baba derives so much of its business from the domestic consumer in China. What's happening right now.
With the Chinese right, you know, on the Chinese consumption side, as we step out of the Lunar New Year holidays, which likely stimulated retail sales in January because of the big festival itself. I do think that with the recent consumption stimulus that Beijing has been putting in taking a step back with seeing them offering literally cash handouts, you know, shopping vouchers to the consumers ahead of the Lunar New
Yr holidays. We're gonna need to see whether that is going to hold up after the holidays itself, and how much of these hooks are we still gonna get from the central government through the rest of the year. But I think we should be you know, on a trajectory whereby consumption sentiment in general have stabilized. Doug, you've actually mentioned, you know, the markets in general, equity markets, they are up. In general, sentiment has recovered from the rock bottom that
we've seen last year. So I would say that things should stabilize this year from a buying sentiment perspective.
So that's on the business to consumer side. What is happening on the B to B side in China? Is Ali Baba doing a lot of business on that front?
Oh yes, absolutely. You know, there b to be a platform, whether it's one six eight eight dot com as it is known or Alibaba dot Com that targets more of the businesses overseas. You know, they have and continue to be the gateway for businesses into the factories within China. So you know, the transactions are actually still ongoing now. Of course, you know, with the rumblings that we have seen in the recent you know, two weeks with regards to tariff on made in China, you know goods itself.
What I would say is that this is not totally unexpected. There will be neartom disruptions to logistics, to supply chain, but there are solutions being put in place by platforms like ali Baba, as well as businesses itself to try to mitigate and operate in this new environment.
I'm so glad you brought up the idea of tariffs here because I'm also curious about Alibaba's overseas e commerce business, particularly in the United States. What do we know about what's happening.
Right you know, they have light PDDs to move been looking to diversified outside of China into new markets including US, and US tends to be a attractive market for most of the e commerce players for region that it is a more homogeneous market and there is demand for a variety of products out there, which again the Chinese e commerce platforms they do have an advantage because they are so much closer to factories and the source of these goods.
So they have also been selling more into US, but on a less aggressive basis, if I can put it this way.
Now, the day goes by when we're not discussing artificial intelligence, and I know that Ali Baba has a big business in terms of cloud computing. How well is that performing right now?
Well, do you know what cloud computing? The revenue, the profitability of this business for Ali Baba, it's actually been on the up trend for the last two quarters or
the first half of their physical year. So do you know the company had expressed that they were fairly confident in driving a double digit cloud revenue growth ahead, and I do think that the latest development of you know, as they tied up with Apple, hopefully we get confirmation of that from the company themselves, definitely is icing on the cake for this trajectory. Again, depending on how much
which they are sinking into R and D infrastructure. I will not be surprised if we get you know, upfront investment out lays over the next twelve months. But I do think that this will and can potentially set a very strong foundation for their growth ahead.
The issue of cap X has been so important when we're looking at what's happening in the AI industry in the United States and whether or not we're going to see at some point a meaningful return on investment. But you mentioned Apple there working perhaps with Ali Baba to roll out some AI features in China. Do we know much about what's happening? I think this story was first reported last week by the Information.
Yes, do you know what not at this juncture company has been in blackout, and I'm quite sure you know, that will be something that will that questions will be raised around it to the best of the ability that a company can share what they're working with Apple about. But again, you know, taking a step back on the developments on Capex, let's not forget that this is a company that has committed to share buybacks as well as you know, they also started paying out dividends the last
physical year. So as the Capex demand increases on the cloud front as well as logistics, let's not forget that. Let's see how they will look to actually maintain this commitment to actually try and improve shareholder's new you know, in the next one year.
Catherine, thank you so much for helping us understand more about what's happening with Ali Baba as we look to the company's earnings report in the week ahead. She is Katherine Lim, senior Consumer and Technology analyst for Bloomberg Intelligence, joining us from Singapore. We go next to South Korea, where we'll get a report this week on consumer confidence.
We thought it would be a good time to take a look at what's happening in the broader economy in South Korea, and for that we'll bring in Bloomberg Sam Kim Sam cover the economies of South Korea and Japan from our bureau in Seoul. Sam, it's always a pleasure. Can you give me an understanding of what's been happening with consumers broadly speaking in South Korea?
Yeah, consumer inflation is generally seen as stable right now in South Korea, although it did pick up a little bit last month. That's because of higher energy and food prices. What happened was the Lunar New Year holiday when families gather and they travel out of town. That happened in January this year, whereas last year it happened in February. So we do get a little bit of year on year pickup in inflation, and that's a good reason for the Central bank here to kind of downplay the importance
of that pickup. And we're kind of expecting that the Bank of Korea is going to continue to move its rate down in order to ease the expenses interest expenses for consumers. But at the same time, there are clear signs that consumers are not feeling very happy because of the political turmo that's been disrupting a lot of you know, the political processes here, and there was a plane crash in December that really hurt the consumer confidence. And then
of course we have the Trump effect. There's a lot of people who are concerned about what that person is going to do in terms of tariffs on a country like South Korea which is very, very rely on exports for growth.
Before we get to.
The tariff part of the story, I'm curious to get back to the consumer. You and I have spoken in the past about the degree to which the Bank of Korea was concerned about elevated property prices. What's the story on the real estate market in South Korea right now.
What happened last year was the Bank of Korea, which is the central bank in South Korea, basically maintain its interest rate at higher than use level for an extended period of time, longer than people thought they would keep it there, and that's really helped tempt down the household that increases, which are usually correlated with the housing prices.
So from late last year, we've been seeing the apartment and housing market prices more or less behaving, you know, staying a little bit under pressure, not going up too high. So there's a lot of concerns surrounding the housing market have come down so far, and that's what to allow the back of Korea to shift their focus.
So let's take a closer look now at the export part of the economy and the degree to which US tariffs may negatively impact that. I think it was in the last week that South Korea's top economic think tank cut the growth forecast for South Korea for the second time in four months. How much of that is due to the story on exports and the expectation that US tariffs will curtail export activity.
The biggest part of South Care's exports is semiconductors, and those semiconductors are produced by companies like Samsung Electronics and Eskaehis. That semiconductor rally that South Korea enjoy last year is starting to cool now from late last year, we've been seeing the export growth numbers for semiconductors starting to go
down to the single digit levels. You're on your own basis, So a lot of people are expecting, given that the chip industry has this notorious women bus cycle, Korean economy is going to start to suffer because cheap exports are going to start to soften. That's at least the expectation of many economists and semiconductor watchers here. And it is particular concerning given that the US government under Trump is likely to impose tariffs on countries not just South Korea,
but based all around the world. And what happens because of that would be South Korea not being able to sort of export enough to not just the US but other countries that are impacted by the terrorists.
Sam, We're looking forward to learning a little bit more about how the South Korean consumer is performing when we look at the data on consumer confidence that's due in the week ahead Bloomberg. Sam Kim covers the economies of South Korea and Japan from our bureau in Seoul, and I'm Doug Chrisner. You can catch us weekdays for the Bloomberg Daybreak Asia podcast. It's available wherever you get your podcast. Tom.
Thank you Doug. And that does it for this edition of Bloomberg day Break Weekend. Join us again Monday morning at five am Wall Street Time for the latest on markets overseas and the news you need to start your day. I'm Tom Busby.
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