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Speaker 1: Let's get to our guess. Mary Nicholas, Senior vice president

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Speaker 1: and Global multi asset portfolio manager at pine Bridge Investments,

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Speaker 1: joining us from Singapore. A lot to talk about, but

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Speaker 1: I want to get your first reaction into the fact

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Speaker 1: that we just saw the Bank of Korea have that

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Speaker 1: smaller than expected interest rate hike. Well, yesterday the A

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Speaker 1: B and Z had a jumbo seventy five basis point hike.

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Speaker 1: All of this really trying to rein in inflation. But

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Speaker 1: we did see the A BNZ, for example, warn of

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Speaker 1: a of a recession mid next year. How are you

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Speaker 1: viewing the complicated central bank picture across Asia? Yeah, I

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Speaker 1: think um, as you rightly said, all the different central

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Speaker 1: banks have been on a different trajectory here largely because

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Speaker 1: of what the inflation picture looks UM in the region.

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Speaker 1: So for example, you take UM Singapore. Singapore has been

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Speaker 1: quite aggressive and moving ahead and trying to battle inflation,

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Speaker 1: so they've been more I guess front loading. So we've

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Speaker 1: seen a lot of frontloading from certain central banks as

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Speaker 1: long as the inflation picture looks to be UM concerning.

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Speaker 1: So but now that inflation is picking up across the region,

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Speaker 1: central banks will have to react um. And of course

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Speaker 1: the key thing now is especially coming from the FED.

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Speaker 1: Will the Feds slow down? Um? We've already seen a

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Speaker 1: slow down from the r b A, We've seen a

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Speaker 1: slow down from the BOC. But again it all depends

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Speaker 1: on where they are, and they're hiking cycle and some

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Speaker 1: have been front loading and more aggressive than others. So

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Speaker 1: where do you see the Fed ending this aggressive timing? Um?

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Speaker 1: So we're looking at rates to settle around four seventy

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Speaker 1: five to five UM percent, So we think rates will

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Speaker 1: settle in that region, but they're going to stay high

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Speaker 1: for a while. UM. In that that inflation remains sticky.

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Speaker 1: We still have inflationary pressures coming in from the from

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Speaker 1: from employment, which obviously means that there's going it's gonna

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Speaker 1: last and linger a lot longer. So of course keeping

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Speaker 1: in rates high is going to be the key thing

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Speaker 1: to ring out inflation. Now, I notice that you are

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Speaker 1: preferring the longer end of the curve, the twenty or

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Speaker 1: thirty year. Just tell us though, in terms of the

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Speaker 1: bond route that we've been seeing, how you kind of

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Speaker 1: guests mitigate some of these concerns when we're looking at

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Speaker 1: when we see peak inflation. Yeah, So one of the

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Speaker 1: things that we're looking at on especially on the twenty

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Speaker 1: year and thirty year and why we found find value

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Speaker 1: there is that we do expect a recession coming through,

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Speaker 1: so um we think that if we're going to see

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Speaker 1: a recession, that it's going to benefit more the back

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Speaker 1: end of the curve. So the valuation is there look attractive,

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Speaker 1: especially with the indication or with the view um that

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Speaker 1: we're going to see a reception recession maybe in the

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Speaker 1: next nine to eight months. Do you see a recession

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Speaker 1: weighing through across the A pack as well? And what

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Speaker 1: about the changing picture of China's economy potentially opening up

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Speaker 1: and giving a boon then to the overall global macro picture. Yeah,

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Speaker 1: so I think for if you look at Asia pac

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Speaker 1: in general, I think that's going to be very sort

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Speaker 1: of country specific. Um. So some countries are obviously doing

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Speaker 1: better than others and some for example, take Japan, we

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Speaker 1: haven't even seen a proper reopening or robust reopening. Same

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Speaker 1: thing with Hong Kong, so as they obviously reopened, things

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Speaker 1: are going to be a lot different for their environment

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Speaker 1: and for their outlook over the next nine to eighteen months. Obviously,

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Speaker 1: if China opens up. Let's say we're expecting maybe around

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Speaker 1: you know, the end of Q two into Q three

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Speaker 1: of next year, that's would likely to change the picture

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Speaker 1: quite a bit, especially giving a boost for Asia overall.

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Speaker 1: But we are seeing some pockets from UM, the from

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Speaker 1: China in terms of easing monetary policy. UM. Some of

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Speaker 1: the things that they've recently announced on the property sector

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Speaker 1: have also been quite positive and should see that incremental

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Speaker 1: improvement in growth overall. But of course the key UM

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Speaker 1: factor mitigating growth is going to still be the zero

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Speaker 1: COVID policy. Yeah, and if as we've been speaking all

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Speaker 1: morning in and too earlier guests, as will even when

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Speaker 1: you do finally see that that path towards reopening, it's

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Speaker 1: going to be messy, it's going to be protracted. With

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Speaker 1: all of that in mind, you're defensive in your portfolio,

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Speaker 1: your underweight equities. Where are you looking for some out

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Speaker 1: performance if you if you're staying selective here, Yeah, So UM,

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Speaker 1: with the expectations that you know, we're expecting earnings to

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Speaker 1: deteriorate further, we've been looking at some sort of pockets

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Speaker 1: that will manage UM in an environment with high inflation

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Speaker 1: and in an environment where growth slows so UM. Where

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Speaker 1: we're looking at is US quality, so companies that have

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Speaker 1: robust balance sheets UM that also have UM a strong

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Speaker 1: high high r S so UM you know a lot

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Speaker 1: of the companies that can pass on some of the

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Speaker 1: prices to their consumers. Another one that we're looking at

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Speaker 1: to is what we've described as the energy evolution basket,

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Speaker 1: which is a combination of company utility companies that are

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Speaker 1: transitioning to new energy and then of course your traditional

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Speaker 1: new energy come police. And the focus here is just

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Speaker 1: that we're expecting investment obviously obviously towards UM E s

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Speaker 1: G and a new energy capacity to increase over the

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Speaker 1: next five years eighteen month time horizon, which is what

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Speaker 1: we're looking at. So obviously that that move to renewables

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Speaker 1: isn't going anywhere now. E s G sustainability certainly seems

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Speaker 1: to be a topic amongst many if we look specifically

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Speaker 1: at the property sector in China. I mean, there's sixteen

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Speaker 1: point plan to try and prop it out. But at

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Speaker 1: the same time, as we've been saying, the COVID zero

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Speaker 1: policy is very much still hampering growth in goldment. Sex

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Speaker 1: actually had a no doubt yesterday saying that these COVID

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Speaker 1: policies are pretty much off setting the positivity that would

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Speaker 1: have come through from that support from the property sector.

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Speaker 1: Would you agree with that, Yeah, there's I have a

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Speaker 1: lot of sympathy for that, because again, um, what is

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Speaker 1: weighing so much on from the COVID zero is consumer demands, consumption,

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Speaker 1: and of course if you had a sixteen point plan

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Speaker 1: to properly the UM property sector, UM, that could also

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Speaker 1: um uh precipitate consumer demand and and support consumer demand further.

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Speaker 1: But with COVID zero, it's hard to reinvigorate UM consumption

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Speaker 1: and consumer demand over overall, so it's likely to remain

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Speaker 1: sluggish until we see a change UM in that policy.

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Speaker 1: Always a pleasure. Mary Mary Nicola, Senior vice president and

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Speaker 1: Global multi asset portfolio manager at Pinebridge Investments, joining us

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Speaker 1: from Singapore here on Bloomberg Daybreak Asia