Daybreak Weekend: US Mortgages, Nobel Prize, China Golden Week

Bloomberg Audio Studios.

Podcasts.

Radio.

News.

This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. Just ahead on the program, we'll discuss mortgage rates in the U.S. and also the outlook for the housing market moving forward. I'm John Tucker in New York.

I'm Tiwa Adebayo in London, where we're asking just how political this year's Nobel Prize presentations could get.

I'm Doug Krisner looking at how Chinese consumers may spend during the Golden Week holiday.

That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

Hi, everybody. I'm John Tucker. Let's start today's program with U.S. mortgage rates. The mortgage rate's climbing for a sixth straight week to an almost three-year high. The contact rate on a 30-year fix rising to 7.3%. That's the highest since November of 2023. For more, we're joined by Erika Edelberg, Bloomberg Intelligence Chief Mortgage-Backed Securities Strategist. That's quite a title.

What is the state of housing? More importantly, how mortgages are dictating what's happening in the housing market right now?

Hi.

Thanks for asking me to join today. Yeah, mortgage rates are definitely getting to that point where they've become unaffordable for a pretty wide swath of Americans right now. And also refinancings have gone completely out of the money. A lot of people who may have bought mortgages, bought homes in the past few years hoping to refinance are pretty out of luck right now. But it's interesting you mentioned the arm rate because actually we are seeing an increasing number of borrowers, up to 10% of FHA borrowers, up to like 12% overall, go into adjustable rate mortgages as an alternative.

But that's not exactly a bargain either. And you... Open yourself up to all sorts of risks should rates go even higher.

Yeah.

I mean, the one thing that makes these types of arms a little bit different than the ones we had, let's say, before the financial crisis is you do have a pretty strong fixed rate period of about five years for most of these or even longer for some of the conventional ones.

Now, how long does a person typically stay in their house?

I think the average time is typically about seven years, but that's going out right now with all these people locked into low-rate mortgages that they took out during the pandemic.

So I wouldn't expect that.

Hello, 3.2% over here. They're going to bury me in my basement.

Yeah, we're expecting that to kind of continue because not only did people buy homes during that period, a lot of people did, but a lot of people refinanced into those low rates. So that's kind of extending the tenure in homes. And actually, you know, as long as we're mentioning that, some of these people who, you know, may be taking out loans, you know, more recently for the hybrids.

may have, if they took out the 3-1 variety, may already be coming due to a reset rate. But as I said, most borrowers do have to qualify, especially in the conventional space, like Fannie, Freddie, and banks, at a higher rate, assuming at least one reset upwards. Whether or not they can is another question, but that was where they qualified, as opposed to back before the financial crisis when these were much shorter reset arms. And you didn't necessarily have to qualify assuming that rates would go up.

If you follow this market, you have to be something of an economist. We had data, the unemployment data, the jobs data that we got on Friday. That indicated it was a little weaker than expected. So that tells us the Federal Reserve, with respect to interest rates, may not have to hike as much as some thought. And that's going to impact the markets.

Yeah, well, one of the reasons, you know, just taking a step back, one of the reasons that rates have gone up, of course, is because, especially since the start of the Iran war, inflation's been a big concern for global economists, especially U.S.

Economists and the Federal Reserve.

So they did implement their first hike this year since 2023, when at the beginning of the year, actually, they were expected to cut rates significantly.

Because it was assumed that inflation was trending towards their desired target.

So as a result, with hikes now being priced into the market, that in turn, even though they don't directly control interest rates for mortgages, that did pressure rates higher. So the fact that the nonfarm payrolls came in a little bit weaker than expected could at least give them room to pause, which could provide some breathing room for the Fed and some breathing room for homeowners.

Against further rate hikes.

Is a home out of reach for a lot of Americans right now?

I mean, by my estimate, and there's all sorts of ways to estimate this, but if you just look at something like the National Association of Realtors Affordability Index, which compares median incomes to the qualifying income to buy the median priced home, that says that more than 50% of Americans can't afford a home. But, you know, builders are helping with that a little bit for new construction by offering.

They're building less expensive homes?

They're building smaller homes.

Okay.

And they are also.

Like a lawnmower shed? I mean, you know.

Well, actually, I was looking at the square footage and, like, we're actually just. There's been a trend in the U.S. culture just buying bigger and bigger homes. Everybody thinks they need four bedrooms, five bathrooms. So I think that they're downscaling that maybe to a more reasonable expectation because the price per square foot hasn't really fallen, but the price of new homes has fallen, or at least the new homes that people are buying. So that tells you that they're just buying smaller square footage.

And they're also offering these things.

Called rate buy downs, although it does cut into their profit margins, where they offer to pay points up front so that some borrowers can have a slightly lower mortgage rate.

Boy.

We ran through a lot of stuff there. Thanks to Erica Edelberg, Bloomberg Intelligence Chief Mortgage-backed Security Strategist. Right now, let's take a look at some of the stocks making news in the week ahead. I'm John Tucker, along with Christine Aquino, the Bloomberg Managing Editor for MarketsLive. Good to see you. Thanks for stopping by. So next week, we get Constellation Brands, Pepsi, and Delta Airlines, among others. Let's start with Constellation Brands, the people behind Among other things, Corona beer. I was doing a back of the envelope calculation how much beer that I've had to drink over the years.

Tell me.

It's a lot.

That's your back of the envelope calculation.

Apparently, like with younger folks today, this is kind of an outlier, but I'm kind of an outlier. You're drinking less.

Yeah.

What in God's name is wrong with them?

Apparently, that's the trend now.

And that is a big challenge for a company like Constellation Brands, right? I mean, just generally, right? Our blooming intelligence analysts taking a look at the beer market, which is over $ 100 billion. And they're looking at this and seeing just a decline in this market generally because, you know, we have, as you mentioned, John, just the younger generation not drinking anymore and not drinking as much. And they're preferring hemp-derived beverages like THC beverages over alcohol. And then there's, of course, the GLP-1 usage trend as well. And all of this combined really just creates a very challenging market for anyone in the beer business. And that's what Constellation Brands is going to be going up against in terms

of their earnings.

This stock, the ticker symbol STC, They've been on the longest losing streak since, what, 1986? Yeah. It's not like it's a buy-the-dip story either at this point.

No.

I mean, I think a lot of analysts in this space are really looking at more structural changes when it comes to the customer base and their habits and how that's going to impact a lot of the companies in this space. Also because there's a crowding-out effect, right? There's a lot of them within that space competing for market share.

And traditionally, with older companies, generations, they've done all right. But just the changes that we're seeing now, all coming together with decreased alcohol consumption, increased GLP usage, all these things combining to really make it a tough environment for Constellation Brands and all of its other peers.

Next up, PepsiCo. Now, people aren't drinking beer. Are they chomping down Fritos and And that stuff, apparently not. I think a lot of the same issues apply to PepsiCo.

Absolutely.

A lot of the same issues. And that's why we've seen for PepsiCo specifically, a couple of downgrades of late. JP Morgan downgrading the company to neutral from overweight. And that's exactly what they're concerned about, right? Just the food and beverage segments underperforming, particularly in North America. And they've also cited salty snacks in particular as has been lackluster, probably tied to the increase in GLP-1 usage, if you ask me. And then we also saw them cut Deutsche Bank to a hold from a buy previously. Again, analysts there are citing that they don't necessarily see a clear path for improvement, given soft demand and then, of course, higher costs on the other end as well. It's kind

of squeezing the company both ways.

How much pricing power does PepsiCo have? I mean, they have recently raised prices.

Yeah, absolutely.

And I think that is a worry for analysts as well, right? Like they have managed to wield up pricing power in previous quarters, but at a time when consumers are struggling to afford groceries and gas the question is how much more can they squeeze out of these consumers? And the fact that there are these analysts now warning that we may be getting to the end of that peak in demand, I think really bodes ill for PepsiCo's earnings coming up next week.

All right, let's finish up with one of the airline stocks, Delta Airlines. One of the headlines that was recently out, they were getting criticism. Elon Musk was making fun of Delta's Wi-Fi. They apparently snubbed Sterling. But I'm not sure that's really going to show.

Up in earnings.

No, not necessarily, though.

Very interesting anecdote. I mean, again, for airlines, it's all about fuel costs. And that's been a big issue for just the space in general, right? And our global intelligence analysts, again, seeing pressure for a lot of airlines in the third quarter. We've seen fair increases, of course, as consumers, we've definitely felt that particularly over the summer. And some of that probably will compensate for higher fuel costs. But to what extent, right?

And so I think their expectation is that margins will likely be lower. Though, again, some of those higher yields, slower capacity growth will help those results. But to a limited extent, I think at this point, that increase in fuel doesn't seem to be letting up, at least for the end users. And that's really going to hurt airlines moving forward.

And to be sure, Delta is a premium airline. They cater to the premium flyers. So I would expect they're a if price increases go up because of fuel?

Yeah, I mean, there's definitely an element of that. And of course, you know, they're a full service carrier. And as you mentioned, you know, they have a more diverse customer base. And so we do have a higher income segment of their customer base probably being a little bit more resilient to the idea of higher costs. And again, like there are people willing to pay up for first class or business class seats, especially on long haul flights.

But Just in general, though, the pressure of higher fuel costs, not necessarily relenting. And so it's really a question of how much can they make up in terms of revenue from that higher income segment is going to be one of the key questions for the set of results.

All right.

Delta, Pepsico, Constellation branch. We'll look forward to those earnings in the coming days. Our thanks to Christine Aquino. Thank you. Appreciate it. Bloomberg Managing Editor for MarketsLive. And just ahead, a Bloomberg Daybreak Weekend. We're going to discuss what we can expect from this year's Nobel Prize presentations. I'm John Tucker, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm John Tucker in New York. Up later in the program, we're going to look ahead to China's Golden Week holiday and how it may impact travel-related spending.

But first, in the coming days, the recipients of one of the world's biggest honors will be announced. This year, the Nobel Prize pot increasing by $ 1. 2 million per category is But will the committee manage to keep the politics at bay? And for more, let's go to Bloomberg Daybreak Europe reporter Tiwa Adebayo.

Last year's Nobel Peace Prize winner, Venezuelan politician Maria Karina Machado, shocked the world by presenting her medal to U.S. President Donald Trump shortly after receiving it. The gesture came after a campaign which many thought would culminate in the world leader being awarded the prize himself. This year, betting markets have identified the U.S. president as a contender for the Peace Prize once again, alongside embattled Ukrainian leader Volodymyr Zelensky.

But one of the president's political opponents is also seemingly in the running. Canadian Prime Minister Mark Carney recently briefly became the favorite to win the prize on U.S. prediction market Kalshi before his odds later fell. Of course, no one knows who has made the Nobel Committee shortlist. It's a famously closely guarded secret. But some countries, including Cambodia and Pakistan, have indicated that they have nominated the president to receive the honour this year. The prize-giving also comes at an interesting time for US-Nordic relations. The US president signed a security deal with Denmark and Greenland in New York during a busy week of diplomacy around the UN General Assembly recently. But Lewis Lukens, a former deputy chief

of mission at the U.S. embassy in London, says Trump's relationship with the region is still complicated.

They are happy that that threat seems to be gone. There's still a huge level of sort of suspicion or distrust, I guess, around Donald Trump. There's a feeling here and in Copenhagen, by the way, that everything that Donald Trump has gotten in this deal, he could have just asked for nicely. a year and a half ago, and he would have gotten it, right? So the whole, like, we're going to invade, we're going to take over Greenland was sort of an unnecessary distraction, which has left, I think, a bad taste for many Greenlandic people. They're happy about U.S. investment.

They're happy that sort of the notion that the U.S. will take over Greenland and take away its sovereignty is now no longer an issue. But at the same time, they feel a little bit sort of upset about the whole way this thing has happened.

That was Lewis Lukens, former deputy chief of mission at the U.S. Embassy in London there, speaking to Bloomberg's David Gurra and Christina Ruffini following the deal announcement last month. So. Will this year's ceremony be any less political? And who's in the running for the other major prizes? Joining us with more is Bloomberg's managing editor for the Nordics, Cathy Ponyan-Parlow, and our Stockholm bureau chief, Charles Daly. So, Cathy, let's start with you. We know how much President Trump wanted to win the Nobel Peace Prize last year. Do you think he's lost interest this year?

Well, President Trump hasn't brought up the prize very much recently, and there hasn't been anything like the pressure he put on last year. He last mentioned the Peace Prize on social media in January, actually, when the 2025 Peace Laureate, Maria Corina Machado of Venezuela, presented her medal in a gilded frame to him in the White House. But, you know, there's always still time. The announcement isn't until Friday, October 9th.

He can still weigh in.

And of course, the Nobel Prizes aren't all just about the Peace Prize. There are six Nobel categories awarded each year, and they'll be starting in the next few days, culminating with that Peace Prize announcement. Charles, could you just talk us through that full agenda? What are the highlights? What should we be watching?

Yeah, as you said, it's six prizes over a period of six days, starting on Monday with Physiology or Medicine. And then each subsequent day has one category of prize, including physics, chemistry, literature, and then peace and economics, as you pointed out. And I think, you know, for Bloomberg audience, we're obviously interested in the peace prize, given its geopolitical consequences, and also the economics prize. If we're talking about the schedule, it's also interesting to note that each prize kind of has a different time of day when it's announced. And that reflects that there are different institutions and award bodies selecting the prize winners.

That's really interesting to hear. And of course, we actually … pretty important year for the Nobel Prize organisation. They are increasing the prize money on offer this year. What's the reasoning behind that? And could you just talk a bit about what this year represents in Nobel history?

Yes.

As you say, they're increasing the prize pot per category by one million kroner to a total of 12 million kroner. And that in part reflects the fact that the Nobel Foundation is celebrating 125 years or its anniversary this year. It is financed by the will of Alfred Nobel, who died in 1896. And the prize money this year equating to about 60 million kroner is roughly about 1% of the overall investment capital that's currently in the foundation's coffers.

So, it's an important year for Nobel history and for the Nobel Prize. But it's also been a bit of an important year for President Donald Trump's relationship with the Nordic countries more broadly. Cathy, we've recently reached a resolution on Greenland. Has his relationship with those countries improved now?

Is it in a better place than it was this time last year?

Yeah, there is indeed a deal. It was signed a few weeks ago in New York between the US, Denmark and Greenland. As you know, Greenland is a semi-autonomous part of the Danish kingdom. And what the deal does, it makes NATO a really integral part of securing Greenland. It helps lessen these tensions within the military alliance and among these Western nations. And it does put the relationship with the Nordic region and President Trump in a better place, for sure.

But perhaps some reports saying that Norway could be expected to receive more tariffs. Is this something that we're likely to see in the coming months?

So Norway isn't party to that specific deal, and it has had a bit of a rocky recent history with President Trump with the Nobel Prize being one of the issues. Now, the U.S. has levied an additional tariff of 10% on the European Union, but Norway, which is outside of the bloc, its exports are paying 12.5% tariff, so a higher rate.

And some of the Norwegian officials who visited the U.S. for some trade talks in August, they came back saying that there's a real possibility that the tariff could rise even further from there.

And I wonder, given this situation, you mentioned that the Nobel Prize was previously a sticking point for the relationship between the U.S. and Norway. Is there less or more pressure on the committee this year to give President Donald Trump the Peace Prize?

Well, the public pressure has certainly lessened but the committee who decide on this prize they're not political at all um they are elected by the norwegian parliament but currently um any sitting lawmakers are barred from being members of this committee to increase its independence so um norwegians insist that politicians have no weight and no say in who gets the prize itself um And so we shouldn't really expect the Nobel Committee to be swayed by kind of any public statements. But of course, we don't know what's going on behind closed doors.

Yeah, certainly. And of course, all eyes are on Norway for the awarding of the Peace Prize. But the rest of the awards take place in Sweden. Charles, I want to bring you back in. How popular is this ceremony in Sweden? Is it something that the general population look forward to every year? What can we expect to happen?

Yeah, I mean, I think that's right. It's a source of national pride for Swedes generally. But I think beyond the ceremony itself, what really is the big event on December 10th is the banquet in the evening when the king and the royal family are present. This is an event that's broadcast live on national TV for several hours.

And even schoolchildren in Sweden will get dressed up on Nobel Day and have a slightly posher than normal lunch at school. So, yeah, it's a big day on the calendar for Swedes.

That sounds like fantastic fun. I have to ask because we mentioned the prize money going up this year. Many of the winners will be academics. What do you think that means for them when they win? Not just the money, but the prestige. Put that into words for us.

Yeah, I think it's a really good question. I think for academics, generally speaking, it is probably seen as the ultimate professional accolade. And, you know, it can really transform, say, an unknown scientist into a global profile overnight. And, you know, I think back to 2023 when Catalin died. Carrico won the medicine prize. And that was, you know, she was not necessarily that known, but her research basically underpinned what would be the COVID vaccine and became a sort of household name overnight as a result of that prize win.

Okay, so definitely practical applications for that Nobel winning research. We'll have to keep a close lookout on the winners. But Cassie, I just want to come back to you briefly because it is true that there are also some organisations rumoured to be nominated for the Peace Prize. What has been the precedent in this area?

Well, we've got just under 300 candidates that have received nomination for the 2026 prize. And the bulk of them are individuals, but there's almost 80 organizations as well. There is no public list of who's in the running, but sometimes people who nominate them disclose who they've nominated. And then there are also like a lot of educated guessers.

In recent years, the price has alternated between a person and then the next year an organization. But there is really kind of no rule to mean that they have to follow this sequence. If they did follow that sequence, it would be this year the time of an organization to get it. And among the ones that are kind of heavily guessed, the Polymarket betting site has $ 25 million in betting volume on the Peace Prize. And Sudan's emergency response rooms, which is a humanitarian aid organization in the civil war, they're leading the betting right now. But you've also got Save the Children. You've got the International Court of Justice, the Committee to Protect Journalists. And there's even the International Space Station has been mentioned.

Wow.

So there are a fair few names rumoured to be on that list, of course, as you mentioned. It is a closely guarded secret. My thanks to Bloomberg's Cathy Poyen-Parlow and Charles Daly. Well, we'll have full coverage of all those Nobel Prize decisions, including that all-important Peace Prize on Bloomberg platforms. I'm Tiwa Adebayo in London. You can catch us every weekday morning here for Bloomberg Daybreak Europe, beginning at 6am in London and 1am on Wall Street. John.

And coming up on Bloomberg Daybreak Weekend, we'll look at what we can expect from China's Golden Week holiday. I'm John Tucker, and this is Bloomberg. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm John Tucker in New York. In China, the Golden Week holiday is underway. It started last Thursday, and it's going to run into the coming week.

Golden Week typically sparks a jump in travel-related spending. And for more, let's go to Bloomberg's Doug Kresner. He's the host of the Daybreak Asia podcast.

Thanks, John. The Golden Week holiday has become a reliable measure of overall household spending. This year, Golden Week began on Thursday, and because the Mid-Autumn Festival started a week earlier... If a person requested some time off, this break does amount to around 13 days. So here's the question. Can this extended holiday translate into increased retail spending? For a closer look, let's bring in Bloomberg's Shirley Zhao. Shirley covers the Chinese consumer space, and she joins from our studios in Hong Kong. Thank you for being here. Give me a sense of what you are seeing right now in this holiday period, Anecdotally, are people traveling more than they did last year?

The early signs and data during this prolonged holiday period are pretty positive. So we have seen a surge of domestic and cross-border travel by mainland Chinese people during the mid-autumn festival. And the spending also increased.

Quite a lot.

So that was pretty encouraging. And some of the most popular travel destinations include Hong Kong and Macau. and perhaps some countries in Southeast Asia. And in Hong Kong, during the Mid-Autumn Festival, there is actually a lantern display in one of Hong Kong's most famous parks. And the display started around the Mid-Autumn Festival, and it extends into the National Day Holiday Festival. There were so many people queuing up there, to enter the park just to see the lantern display, that the government had to cut off the queues at some point. And the display also generated quite a lot of social media buzz. And some Hong Kong restaurants in the core shopping districts are reporting a double-digit

sales growth from last year. And also the government is expecting a 5% increase of arrivals by mainland Chinese tourists to Hong Kong. So we have seen some early signs of quite positive travel and spending results.

I'm glad you mentioned Macau because some of the recent data that I have seen for gaming revenue was a little disappointing. I think for a fourth straight month, we saw a contraction in the month of September. Analysts were expecting an increase, right? What's happening there? Give me a sense of why Macau is not doing well.

We must remember that this holiday period, as well as a few months ahead of the holiday period, come as China's economy is still pretty weak. And last year in the months between, say, June and September, October, and even towards the end of the year, China's consumer sentiment was really strong because China's stock market was boosted by AI.

But this year, around this time, China and Hong Kong's stock markets aren't doing that well. They are among the weakest in Asian key markets. And also this year, Beijing has really stepped up its effort in clawing back tax revenues of rich people on.

Their overseas wealth.

So previously, a lot of rich people would set up overseas trusts and buy a lot of insurances in Hong Kong and in in stocks. But now, all these investment and wealth have to be taxed. And China has set up special task forces to basically track down these people and reclaim the tax revenue. That's why consumer sentiment in recent months have become relatively weak.

So what is your sense of whether or not travelers are choosing some long-haul destinations? I'm thinking parts of Europe like Spain or even Portugal, maybe other places in the APAC region like New Zealand. Are we getting any information that people are going beyond even Hong Kong or Singapore?

We haven't seen much data on the long-haul travel, but the cross-border travel, so traveling from China to overseas or to Hong Kong to Macau, the number of those people have increased from last year. We can assume that because of weaker consumer confidence, there might be fewer trips to destinations in Europe or in Canada or in the U.S., but we'll have to see official data for that after the holiday.

I'm curious about the cruise industry, whether or not the ships are leaving Hong Kong and going to destinations around the APAC region and whether that business is doing well.

Yeah, Hong Kong is actually now trying to build a cruise business tourism hub. So the government has made quite a lot of efforts to try to attract more cruise ships coming to Hong Kong to stop over in Hong Kong or leaving from Hong Kong. So we have seen an increase of the number of cruise ships visiting Hong Kong or leaving from Hong Kong. So at Hong Kong's international cruise terminal, things are definitely livelier than a few years ago.

What about the month of October, broadly speaking, if we move beyond the holiday? I know Halloween shows up in the month of October. There are a few other events, particularly in Hong Kong, that make for a pretty active calendar where you would think that consumers are going to be spending money. Do you think, broadly speaking, the month of October is going to be pretty positive for consumer spending?

The outlook remains a little bit uncertain given what we've seen happening in Macau's casino industry and also in China's luxury spending industry. So in recent months, China's luxury sales have also decreased a lot. Some luxury brands are seeing double digit drops in months like June and July. So things are a little bit murky. But yes, with all these major events lining up in the rest of October, hopefully that will boost the tourist spending. But we'll have to wait and see.

We talk a lot about the K-shaped recovery or the K-shaped economy that's happening in China. Is the same thing true in Hong Kong? Do we see this bifurcation of consumers where you have those that are very wealthy or of means and then people who are maybe less apt to part with what money they do have?

Yeah, that's very much true. Or I should say that has been true in Hong Kong until recently. So that's the same more broadly in greater China as well, because of the crackdown, the economic slowdown, and because of the lack of AI boosted stock market. Consumption has decreased, and that's affected especially big-ticket items, for example, jewelry, cars, and some other expensive items. They are the worst hit in this wave of weakening consumer spending. But yes, generally speaking, the rich people remained, their spending appetite remains stronger. And the middle class and the lower class people have been cutting their spending. So we have seen, for example, brands like Hermes and Chanel performing better than other mid-tier luxury brands.

And on the lower tier brands, of the consumption spectrum, you know, we are seeing people are basically engaging in cutthroat competition. So a lot of brands are cutting prices to compete to get to the bottom, to attract more consumers.

I'm curious about what's happening in the wealth management business in Hong Kong and whether in this golden week period, a lot of the firms there are trying to lure mainland people into that arena. And to have set up meetings, perhaps, to put money to work through firms in Hong Kong. Is that still the case?

Yeah, that's typically what happens during long holidays. So a lot of mainland Chinese people will travel to Hong Kong, not only for sightseeing, but also have their wealth management plans designed and signed. But in recent months, because of China's tax crackdown, and that's affected especially Hong Kong's wealth management sector, for example, insurance companies, and there are worries that this crackdown would broaden to other sectors such as real estate as well. So whether China's rich people are still coming in Hong Kong in droves or whether they are taking a more wait-and-see approach attitude to just see what happens. A lot of analysts are guessing that it may be the latter. So the rich people may just

want to halt their spending or their investment for now until this wave of crackdown has passed.

Give me a sense of how this breaks down demographically. I'm going to imagine that it's the younger generation that's really kind of leaning in to do more of the spending and that older generations like mine are less apt to step up to the plate and open their wallets or purses or whatever and spend. Is that typically the case?

That is typically the case. So we've seen a lot of brands, including luxury brands in the past years, really going after the Gen Z shoppers. But over the past year or so, because China has seen pretty high youth unemployment rate, younger people's spending appetite has also decreased. So for example, in Hong Kong, we can see a lot of younger people basically going after low-budget travels.

So previously, a.

Lot of people would come to Hong Kong to just shop, shop for luxury like Hermes handbags or cosmetics or pharmaceuticals. But over the past one or two years or so, When they come to Hong Kong, they're not spending that much. They're going after sightseeing and they're taking selfies outside of boutique bakeries and cafes. And sometimes they don't even spend in those bakeries or cafes. We've seen cases where Chinese travelers would just grab a mug left over by the previous person outside of a cafe and then take a selfie outside. with that mug and they would say, oh, see, I've been there. Of course, this doesn't apply to everybody, but we've seen cases like this and we have seen generally Chinese consumers tightening their belt. But as I mentioned,

there have been some pretty positive early signs for the holiday period in terms of travel and spending. So we still need to wait and see what happens.

You and I have talked in the past about the impulse sometimes to have the experience rather than to purchase merchandise per se. That's a trend that I think is still happening then, right?

Yes, exactly.

So that's the fundamental change in Chinese shoppers' shopping habits. So before, they just go after brand names, big brand names, or products they want. So they have a very clear target when they go traveling, that is shopping. But now it's much more experience-based. They're going after things that they have never experienced. They're going after unique travel experiences. So they are exploring outside of core shopping and tourism districts.

Shirley, it's always a pleasure. Thank you so very much for helping us look at how consumers may engage with Golden Week. That is Bloomberg Shirley Zhao. Shirley covers the Chinese consumer space, joining from our studios in Hong Kong. I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. John.

All right. Thanks, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 a.m. Wall Street time. for the latest on markets overseas and the news you need to start your day. I'm John Tucker. Stay with us. Top stories and global business headlines. They are coming up right now.

Daybreak Weekend: US Mortgages, Nobel Prize, China Golden Week

Kapitelklicken springt direkt hin

Shownotes

Transkriptvom Podcast bereitgestellt · Zeitmarken springen hin