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Speaker 1: Let's get to our guest. He's capable of stuff like

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Speaker 1: that too. Ken Weng joins this Asian equity portfolio specialist

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Speaker 1: at East Spring Investments. So the arguments for along China

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Speaker 1: trade are themselves very long, can um, I don't want

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Speaker 1: to hear you do them. So I've just simplify the

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Speaker 1: really fast the reopening, the lighter touch on regulation, the

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Speaker 1: property measures we've seen in the much lower valuations. The

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Speaker 1: arguments against I suppose what COVID nineteen at the moment

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Speaker 1: still pretty oppressive. Yeah. The fact is that you know,

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Speaker 1: as you mentioned earlier that UM, you know, there has

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Speaker 1: been definitely progress that we've seen from China, and if

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Speaker 1: we look at where we were just a couple of

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Speaker 1: months ago to where we are today, there seems to

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Speaker 1: be light at the end of the tunnel. And as

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Speaker 1: you mentioned earlier, UM, the fact is is that valuations

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Speaker 1: are looking very interesting and very attractive. When you look

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Speaker 1: at the EPs growth estimates three, they're actually very strong

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Speaker 1: compared to most other countries around the world. And the

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Speaker 1: fact this is that China still has underperformed most other

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Speaker 1: major markets over the past few years. And so these

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Speaker 1: are key rationals and up and reasons why we feel

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Speaker 1: that three could be a fairly opportunistic year, especially on

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Speaker 1: the A share market, where it still has continued to

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Speaker 1: underperform despite some of the recent rally that we have

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Speaker 1: seen in the China offshore markets. Yeah, it wasn't a

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Speaker 1: great year for the Shanghai columns two or off about

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Speaker 1: fourteen percent. Where do you see us at the end

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Speaker 1: of this year? UM, we don't like to give specific

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Speaker 1: you know, numbers or percentage upside, but the fact this

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Speaker 1: is that when you look at the s S three

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Speaker 1: hunder right now, I was trading roughly around eleven and

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Speaker 1: a half times forward earnings. But the key factor is

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Speaker 1: that when you look at earnings growth opportunities and earnings growth,

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Speaker 1: we see potentially UH the c S I three hundred

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Speaker 1: constituent stocks roughly growth by about three So all signs

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Speaker 1: are pointing definitely in a much better direction. And the

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Speaker 1: fact is is that you know what, on the reopening

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Speaker 1: with further policy supports UH contributing to a lot of

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Speaker 1: you know, sort of the various areas that we've seen

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Speaker 1: previously within the new economy sectors in China. We believe

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Speaker 1: those sectors should continue should shine in can you see

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Speaker 1: a scenario though where common prosperity roars back to the

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Speaker 1: to the headlines. There's always that possibility, But the fact

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Speaker 1: is is that there's This year is definitely going to

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Speaker 1: be a key focus on economic growth because we saw

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Speaker 1: in two how economic growth definitely did slow down. So

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Speaker 1: in order for China to achieve you know, hovering around

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Speaker 1: that five percent economic growth for the fact is that

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Speaker 1: a lot needs to be done and a lot of

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Speaker 1: support needs to be had in order to continue to

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Speaker 1: strive for much stronger growth in tree. And this is

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Speaker 1: gonna be very important because as trying to continues to

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Speaker 1: see strong economic growth, then you're going to start to

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Speaker 1: see individuals going off to spend again. You're gonna see

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Speaker 1: corporates increasing their overall capex, demand for more capital, demand

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Speaker 1: for more credit, and the whole system you know, continues

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Speaker 1: as what we've seen previously. Typically previously when China's tying

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Speaker 1: the growth that's been positive for the commodities complex. Do

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Speaker 1: you anticipate that being the case of this time around?

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Speaker 1: It could and you know, we we don't see it

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Speaker 1: uh during the first quarter, but our anticipation is that

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Speaker 1: by the second quarter and towards the middle to the

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Speaker 1: latter half of the second quarter, we feel that things

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Speaker 1: will definitely ramp up to UH two levels, pretty much

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Speaker 1: what we've seen pre COVID. So these next couple of

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Speaker 1: months we're still gonna be tackling, you know, a lot

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Speaker 1: of the re openings and a lot of things that's

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Speaker 1: still going on. But hopefully by the latter half of

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Speaker 1: the second quarter we can really start to see things

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Speaker 1: starting to normalize again. So we have the Hong Kong

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Speaker 1: China border opening up on Sunday in a lightweight sixty A.

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Speaker 1: Is that a little disappointing to you or be? And

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Speaker 1: this goes to my first question, which you didn't quite answer.

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Speaker 1: We have COVID sweeping unchecked across the country. How big

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Speaker 1: of a negative is that. Yeah, that's why our anticipation

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Speaker 1: right now is that these next couple of months, there's

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Speaker 1: still gonna be a lot of hurdles that China still

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Speaker 1: has to go through. And hence that's why over the

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Speaker 1: next three months you are believed that there's still gonna

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Speaker 1: be a lot of bumps on the road. But the

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Speaker 1: fact is that the border is open now between Hong

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Speaker 1: Kong China. We've seen how specifically. You know, just during

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Speaker 1: this morning alone, there has been roughly about three thousand

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Speaker 1: people who have been registering online to go back into China.

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Speaker 1: So we definitely do see a demand. So definitely, you know,

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Speaker 1: having that trade and having that travel between Hong Kong

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Speaker 1: and China reopening again, that's going to be very key

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Speaker 1: because we've seen how previously you know, with that channel,

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Speaker 1: with that uh you know, sort of that availability to

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Speaker 1: travel between Hong Kong China, you do start to see

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Speaker 1: trades as well happening again. And that should also fold

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Speaker 1: well for Hong Kong companies and developed economies as cod

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Speaker 1: restrictions have been relaxed and growth has picked up again,

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Speaker 1: consumptions picked up again. We have seen a rise in

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Speaker 1: inflation as well. It's this something that's in your thesis

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Speaker 1: for China. It is is that whole pinned up demand.

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Speaker 1: And the fact is is that, you know, with pinned

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Speaker 1: up demand, we saw how you know, when a lot

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Speaker 1: of other economies around the world start to open up,

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Speaker 1: you saw that uh, you know, fairly big pickup in demand.

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Speaker 1: But the fact is is that you know, you also

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Speaker 1: need to have a fairly modest economic recovery, and the

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Speaker 1: fact is is that you know, if the Chinese economy

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Speaker 1: is going through a mass recovery and people are seeing

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Speaker 1: a bit more lightly and in the tunnel they see

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Speaker 1: economic activities picking up, then the you know, the drive

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Speaker 1: to actually spend more that we think that's going to

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Speaker 1: be very important. And so hopefully, you know, within the

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Speaker 1: next few months, with things starting to settle down, we

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Speaker 1: believe that pin up demand should actually continue to rise.

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Speaker 1: And of course, you know, we have the CNY period

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Speaker 1: so you know, some of these numbers will be distorted.

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Speaker 1: But you know, once we net out the CNY periods

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Speaker 1: for January February and then we start looking and some

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Speaker 1: of the data, hopefully beginning during the beginning of the

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Speaker 1: second quarter, we can actually start to see a gradual

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Speaker 1: pickup in activities in a lot of different areas within China.

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Speaker 1: Let's talk about more individual areas. I'm not sure if

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Speaker 1: you can mention companies themselves, but I will One, we

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Speaker 1: had the news about Aunt getting approval to raise cash

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Speaker 1: and and that really spruced up the Ali Baba share price. Um,

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Speaker 1: do you expect more individual announcements like this that could

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Speaker 1: feed gains in companies like ma Twin or or you know,

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Speaker 1: others in the marketplace like JD dot com. Yeah, and

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Speaker 1: some of those names has a right gun quite a bit.

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Speaker 1: As you mentioned earlier, we look at over the past

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Speaker 1: few weeks or so, you know, we've already seen quite

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Speaker 1: strong gains for a lot of the either the A

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Speaker 1: d R listed Chinese stocks or some of the tech

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Speaker 1: related names new economy relay names which are listed here

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Speaker 1: in Hong Kong. Now, there's definitely been strong rises for

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Speaker 1: a lot of these names. And the fact is is

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Speaker 1: that you know, for some investors, they might see this

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Speaker 1: as an opportunity to take a batch of the strong

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Speaker 1: performance that we've seen over the past month or so,

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Speaker 1: and we could see some investors taking some profit. But

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Speaker 1: over the medium to longer term, you know, our belief

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Speaker 1: is really still a focus on new economy sectors. So

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Speaker 1: we want to be aligned to much more focused on

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Speaker 1: companies which will stand a benefit from China's reopening, specifically

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Speaker 1: through Chinese government policies, who can actually help alleviate more

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Speaker 1: spend and more activities to those companies, you know, to

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Speaker 1: band them from it. Just briefly, would you take profits

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Speaker 1: here and then come back in or would you just

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Speaker 1: ride this thing got fifteen seconds in certain areas, in

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Speaker 1: certain sectors we could, especially given the strong rise that

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Speaker 1: we've seen. Again you look at it. It just it's

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Speaker 1: kind of quite a bit over the past month or so.

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Speaker 1: So definitely know for certain sectors that's done well. We

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Speaker 1: wouldn't talk, okay, so taking some profits. Yeah, we had

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Speaker 1: the hanksing in next go from fourteen thousand and change

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Speaker 1: to twenty one thousand and change and what a month

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Speaker 1: and a half something like that. Pretty crazy eighteen minutes

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Speaker 1: past the many thanks to Ken Wong from East Spring Investments,

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Speaker 1: says Bloomber