1
00:00:05,519 --> 00:00:08,200
Speaker 1: Welcome to Fear and Greed, Summer Investing series brought to

2
00:00:08,280 --> 00:00:12,080
Speaker 1: you by Vanta, specialists in compliance led growth. I'm sean almer.

3
00:00:12,480 --> 00:00:15,920
Speaker 1: Investors looking to diversify their portfolios may well be looking

4
00:00:15,920 --> 00:00:19,079
Speaker 1: to global markets, so where does China fit into this?

5
00:00:19,280 --> 00:00:22,080
Speaker 1: As always, this is general information only and you should

6
00:00:22,079 --> 00:00:25,799
Speaker 1: seek independent advice before making investment decisions. William lu Is

7
00:00:25,800 --> 00:00:29,880
Speaker 1: a senior investment analyst at Wilson Asset Management. William, welcome

8
00:00:29,920 --> 00:00:30,720
Speaker 1: back to Fear and Greed.

9
00:00:31,000 --> 00:00:31,479
Speaker 2: They sell.

10
00:00:32,400 --> 00:00:34,720
Speaker 1: You've been in China recently. I remember when we spoke

11
00:00:35,200 --> 00:00:36,800
Speaker 1: last year. At one point you were about to head

12
00:00:36,840 --> 00:00:41,480
Speaker 1: over there. What's your overall impression of the Chinese economy

13
00:00:41,479 --> 00:00:42,000
Speaker 1: at the moment.

14
00:00:42,840 --> 00:00:47,680
Speaker 2: Yes, Chinese economy continues to remain weak. As you said

15
00:00:47,760 --> 00:00:51,440
Speaker 2: us in China in November, and the sense underground is

16
00:00:51,800 --> 00:00:55,600
Speaker 2: some of the most recurring conversations I had with assumption downgrade.

17
00:00:56,000 --> 00:00:59,840
Speaker 2: Clearly people were watching what they were spending on being

18
00:01:00,000 --> 00:01:04,600
Speaker 2: prioritizing what their wallets are going towards. So despite some

19
00:01:04,640 --> 00:01:06,360
Speaker 2: of the announcements that we've seen towards end of the

20
00:01:06,480 --> 00:01:09,360
Speaker 2: year of COORDINATID fiscal stimulus, we think that's largely going

21
00:01:09,400 --> 00:01:12,560
Speaker 2: to be a twenty twenty five story. The government signaled

22
00:01:12,600 --> 00:01:15,880
Speaker 2: more public borrowing and more focus on policy to focus

23
00:01:15,880 --> 00:01:18,680
Speaker 2: on consumption, but we yet to really see the signs

24
00:01:18,680 --> 00:01:21,400
Speaker 2: of that. So feedback on the ground was that we

25
00:01:20,959 --> 00:01:24,399
Speaker 2: saw it. We saw a continuation of the macroeconomic conditions.

26
00:01:24,400 --> 00:01:26,360
Speaker 2: We saw a little bit of bump during Golden Week

27
00:01:26,400 --> 00:01:29,080
Speaker 2: in October as consumers had a little bit of hope

28
00:01:29,080 --> 00:01:32,720
Speaker 2: that maybe uti fiscal stimulus measures could work and they

29
00:01:32,720 --> 00:01:35,880
Speaker 2: had some coupons on like goods, et cetera. But it

30
00:01:36,040 --> 00:01:38,160
Speaker 2: continues to be weak and that's evidence in some of

31
00:01:38,160 --> 00:01:41,640
Speaker 2: the more recent data with this. Retail sales growth is

32
00:01:41,680 --> 00:01:44,520
Speaker 2: only grade three percent year a year in November, which

33
00:01:44,560 --> 00:01:47,559
Speaker 2: is other than a five percent expected. And then at

34
00:01:47,600 --> 00:01:50,000
Speaker 2: the same time, industrial production is doing okay, like that's

35
00:01:50,040 --> 00:01:53,240
Speaker 2: growing roughly just above five percent year on years. So

36
00:01:53,280 --> 00:01:55,600
Speaker 2: it's leading to a little bit of overcapacity issue, which

37
00:01:55,640 --> 00:01:58,600
Speaker 2: isn't helping. With the US China tariffs that it potentially

38
00:01:58,680 --> 00:02:02,040
Speaker 2: ended up horizon as well, Trump talking about blanket sixty

39
00:02:02,040 --> 00:02:05,400
Speaker 2: percent taris So like, as a team, we have minimal

40
00:02:05,440 --> 00:02:09,960
Speaker 2: exposure to China, we're closely observing what's happening underground. We

41
00:02:10,000 --> 00:02:13,680
Speaker 2: still need to see some signs of stabilizing property prices,

42
00:02:14,400 --> 00:02:16,920
Speaker 2: which we kind of are skying. Because property prices fell

43
00:02:16,960 --> 00:02:19,840
Speaker 2: at its slowest rate in November. It's still not positive,

44
00:02:19,880 --> 00:02:24,280
Speaker 2: but arguably less negative. It's bad exactly. We still need

45
00:02:24,320 --> 00:02:28,000
Speaker 2: to see science of the property market stabilizing. We think

46
00:02:28,080 --> 00:02:31,280
Speaker 2: China can improve just given its low base, low expectations.

47
00:02:31,320 --> 00:02:33,760
Speaker 2: We do think there'll be fiscal stimulus measures in twenty

48
00:02:33,800 --> 00:02:37,080
Speaker 2: thirty five, but we're expecting a modest improvement. We're not

49
00:02:37,160 --> 00:02:41,520
Speaker 2: really expecting a dramatic acceleration, which I think some investors

50
00:02:41,639 --> 00:02:45,000
Speaker 2: were hoping for. They when the announcement of physical stimulus

51
00:02:45,080 --> 00:02:45,840
Speaker 2: measures came up.

52
00:02:46,480 --> 00:02:48,880
Speaker 1: So if you're in Australian that wants to invest in China,

53
00:02:49,000 --> 00:02:53,760
Speaker 1: if for no other reason then DIVERSI diversification, How should

54
00:02:53,760 --> 00:02:55,880
Speaker 1: you think about getting into China at the moment.

55
00:02:56,800 --> 00:03:00,520
Speaker 2: Yeah, it's a really good question. You can buy shares

56
00:03:00,560 --> 00:03:04,040
Speaker 2: like HH shares in Hong Kong as a direct way.

57
00:03:04,240 --> 00:03:07,040
Speaker 2: The other way, like the way we've been looking at

58
00:03:07,120 --> 00:03:11,520
Speaker 2: China is a lot of Western brands have Chinese exposure

59
00:03:11,520 --> 00:03:15,600
Speaker 2: as well. So a company say Nike, which we don't own,

60
00:03:15,639 --> 00:03:19,160
Speaker 2: but a portion of their revenues come from China. So

61
00:03:19,240 --> 00:03:22,120
Speaker 2: there's there's multiple ways to play it, weather from directly

62
00:03:22,160 --> 00:03:25,520
Speaker 2: investing in Chinese secutives but also in Western companies which

63
00:03:25,600 --> 00:03:28,080
Speaker 2: might have Chinese revenue exposure.

64
00:03:29,840 --> 00:03:33,160
Speaker 1: What's your big fear about China? Then? So if I

65
00:03:33,320 --> 00:03:35,000
Speaker 1: decide I'm going to buy Nike, I'm going to buy

66
00:03:35,040 --> 00:03:37,600
Speaker 1: a BHP out of Australia. That makes an easy one,

67
00:03:38,120 --> 00:03:40,040
Speaker 1: But I mean, what what is the fear? Is it

68
00:03:40,120 --> 00:03:43,480
Speaker 1: that China actually the growth rate doesn't pick up like

69
00:03:43,520 --> 00:03:44,200
Speaker 1: we hope it will.

70
00:03:45,240 --> 00:03:48,800
Speaker 2: Yeah, I think the fear is like the playbook in

71
00:03:48,920 --> 00:03:53,120
Speaker 2: China's changed. So before you could buy BHPN rio on

72
00:03:53,880 --> 00:03:56,800
Speaker 2: iron ore exposure because China would stimulate they will try

73
00:03:56,840 --> 00:04:00,760
Speaker 2: and reflate property prices, invest in infrastructure, so the iron

74
00:04:00,800 --> 00:04:04,560
Speaker 2: ore minors and the coupodities with big beneficiaries. This time

75
00:04:04,600 --> 00:04:06,400
Speaker 2: it feels a little bit different because they're trying to

76
00:04:06,440 --> 00:04:09,680
Speaker 2: deflate the property bubble, and so we think the winner

77
00:04:09,720 --> 00:04:12,280
Speaker 2: is coming on the other side will probably be consumption

78
00:04:12,400 --> 00:04:15,840
Speaker 2: based companies. But then also the market environments changed. So

79
00:04:15,960 --> 00:04:23,039
Speaker 2: Western brands previously enjoyed halo effects in China, so Starbucks, McDonald's, Nike,

80
00:04:23,240 --> 00:04:26,520
Speaker 2: they were seen as amazing brands really high quality, but

81
00:04:26,560 --> 00:04:29,599
Speaker 2: the Chinese competition has largely caught up, so I was

82
00:04:29,640 --> 00:04:31,920
Speaker 2: really surprised at the amount of innovation there. And there's

83
00:04:31,960 --> 00:04:35,560
Speaker 2: a real value proposition. So maybe they're not as good

84
00:04:35,600 --> 00:04:38,200
Speaker 2: as the top tier performing products, but they understand the

85
00:04:38,279 --> 00:04:41,880
Speaker 2: local market. They've got the manufacturing local for local, and

86
00:04:41,880 --> 00:04:45,160
Speaker 2: they're selling it at affordable price. So Chinese consumers are

87
00:04:45,440 --> 00:04:49,600
Speaker 2: in an environment where consumers are becoming increasingly savvy. We're

88
00:04:49,680 --> 00:04:52,000
Speaker 2: signing to see some of those local Chinese brands do

89
00:04:52,000 --> 00:04:52,640
Speaker 2: do quite well.

90
00:04:52,680 --> 00:04:55,280
Speaker 1: Actually interesting, William, thank you for your time.

91
00:04:55,760 --> 00:04:56,240
Speaker 2: Thanks Sean.

92
00:04:56,640 --> 00:04:59,520
Speaker 1: That was William Luis and your investment analyst at Wayne Global.

93
00:05:00,000 --> 00:05:03,320
Speaker 1: Remember to get your own independent advice before making investment decisions.

94
00:05:03,520 --> 00:05:05,920
Speaker 1: This is Fair and Greed Summer Investing series brought to

95
00:05:06,000 --> 00:05:09,360
Speaker 1: you by vant Van to automates compliance for frameworks like

96
00:05:09,680 --> 00:05:14,240
Speaker 1: ISO twenty seven, one two, CPS two, three, four and

97
00:05:14,320 --> 00:05:17,320
Speaker 1: essentially eight saving time and money while building trust. Join

98
00:05:17,400 --> 00:05:20,400
Speaker 1: over eight thousand companies like Atlasian, Dovetail and fire Ant

99
00:05:20,520 --> 00:05:24,080
Speaker 1: managing real time risk. Get one thousand dollars off at

100
00:05:24,200 --> 00:05:27,720
Speaker 1: vanton dot com. Slash Fear and Greed. I'm Sean Almer.

101
00:05:28,040 --> 00:05:28,640
Speaker 1: Enjoy your day,