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Speaker 1: All right, let's get to our guest, Preshant Bayani. He

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Speaker 1: is the c I O for Asia at BNP PERRYBA

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Speaker 1: Wealth Management. He's on the line from Singapore. Prishan, thanks

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Speaker 1: for being with us. So many things to talk about

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Speaker 1: here in terms of what is driving market action. There,

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Speaker 1: the earnings, there is the FED. What is top of

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Speaker 1: mind for you? Yeah, great question. I think we're focusing

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Speaker 1: firstly on earnings because it's a litmus test. We were

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Speaker 1: already new to ectility is going into the lou With

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Speaker 1: the last few months, we fought earnings estimates were too high.

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Speaker 1: We're seeing earnings actually come in about three percent above expectations.

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Speaker 1: It's a lower beat rate than normal, but it's not

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Speaker 1: as much as feared by the market because the market

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Speaker 1: moved ahead of course of the sell side analysts on

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Speaker 1: the earnings estimates. So so far, so good. It's early.

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Speaker 1: This is the heaviest week coming up of in terms

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Speaker 1: of number of companies that are coming out, So we're

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Speaker 1: gonna see some choppy trading around that, and we're gonna

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Speaker 1: see relative winners and losers. But overall, so far, it's

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Speaker 1: a little bit too early to make a strong fiction

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Speaker 1: coming out of it with the Fed. I think what's

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Speaker 1: happening now is seventy five base points that baked in. Obviously,

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Speaker 1: what's interesting is you're starting to see longer term meals

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Speaker 1: come down, not up. So the market is clearly moved

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Speaker 1: from inflation worries to growth worries and obviously the dreaded

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Speaker 1: hourward recession. So that's something that we want to see

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Speaker 1: in terms of is it mild is it deep? Right

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Speaker 1: now we see a slowdown, not a recession, but it's

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Speaker 1: a closed call. And as you say, the Fed will

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Speaker 1: be moving that focus shifting potentially to avoid a recession

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Speaker 1: in three What happens to market action after this seventy

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Speaker 1: five basis point hike that is baked in? Do we

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Speaker 1: continue to see an extension of the bear market rally? Yeah.

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Speaker 1: With regard to the Fed, massig interesting do they keep

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Speaker 1: the same hawkers message in the last from the last meeting,

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Speaker 1: because actually some of the forward looking data has turned

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Speaker 1: out on growth like e m I data, manufacturing data.

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Speaker 1: Unemployment still is very low and jobless plane is just

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Speaker 1: mildly picking up, So that will be the key thing

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Speaker 1: the market focuses on. We don't see a big shift

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Speaker 1: on their language just because inflation still is too high.

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Speaker 1: I think they want to see probably two three prints

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Speaker 1: in a row of CPI getting better, as well as

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Speaker 1: other inflation indicators. But they will be a little bit

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Speaker 1: relieved that longer term inflation expectations actually are anchored, unlike

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Speaker 1: obviously over the next one year. Maybe look at five

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Speaker 1: year inflation expectations. They've actually come down over the last

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Speaker 1: couple of months. One of the biggest stories we've been following,

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Speaker 1: particularly yesterday, was Ali Baba seeking that primary Hong Kong listing,

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Speaker 1: potentially the US exit looming, and a lot of people

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Speaker 1: saying this could be a boon for some of these

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Speaker 1: tex stalks because it could take away some of the

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Speaker 1: concerns about potential regulations on the U S side. Does

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Speaker 1: this kind of in line enliven the China tech story,

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Speaker 1: particularly as we're hoping the worst of the Beijing crackdown

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Speaker 1: is behind us. Yeah, I mean it's another posit of

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Speaker 1: the sense that obviously people want a backstop in terms

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Speaker 1: of US delisting toms are still going on, and obviously

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Speaker 1: they've been going on for some time and there's no

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Speaker 1: clear conclusion yet. But this China, if you will homecoming

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Speaker 1: of stalks back to the Hong Kong Exchange is a

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Speaker 1: positive thing and obviously giving access in liquidity from mainland

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Speaker 1: China invested into Hong Kong also is good for liquidity.

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Speaker 1: It doesn't change the fundamentals of the company, but it's

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Speaker 1: good in terms of liquidity in a backstop against the

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Speaker 1: risk of delisting in the US. Do you think it

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Speaker 1: represents a pivot, a point where we can really take

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Speaker 1: seriously a decoupling. We've talked about it before. There's been

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Speaker 1: the trade war. Uh, there's this story that kind of

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Speaker 1: came to the four when tensions became um elevated in

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Speaker 1: Hong Kong. There's a situation now with Taiwan. Are we

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Speaker 1: are we at risk of seeing a more serious form

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Speaker 1: of decoupling between these two economies in the long term

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Speaker 1: and selected areas, Yes, de globalization, near shoring. These trends

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Speaker 1: are going to continue their five ten year trends. If

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Speaker 1: you want to move, for example, semi conductive supply chain,

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Speaker 1: it takes five ten years. But it's not just the US.

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Speaker 1: Europe also one plants built in in Europe for semiconductors.

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Speaker 1: The Ukraine War is accelerating this deglobalization and near shoring

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Speaker 1: in selected areas where perhaps there are a national security issues,

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Speaker 1: but it's also food and energy security. So for Europe

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Speaker 1: in particular, that's even a bigger issue in the short

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Speaker 1: term as we know. So that's a broader chin that's

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Speaker 1: going to continue, and I think you have to look

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Speaker 1: at it in that context. We went through an incredible

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Speaker 1: period where you are China enter w t O two

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Speaker 1: thousand one, the globalization outsourced to the lowest wage countries.

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Speaker 1: That's changing for a number of reasons going forward. In

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Speaker 1: terms of what we're saying in the property industry as well,

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Speaker 1: that is a very big problem for the overall growth

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Speaker 1: picture there too. We are starting to see some signs

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Speaker 1: of more policy support there too in terms of trying

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Speaker 1: to cushion this downturn. How do you view the space

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Speaker 1: in the property sector. Is that something you're staying away

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Speaker 1: from at the moment. Yeah, it was still conscious on

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Speaker 1: the property market. We haven't seen that body yet. We've

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Speaker 1: got ten months in a row of following property prices

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Speaker 1: um we have seen now more measures to put a

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Speaker 1: flor or. I mean this is thirty pc of GDP

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Speaker 1: of China's overall economy that direct and indirect effects. It's

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Speaker 1: a major issue to put a flaw on growth, and

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Speaker 1: we're gonna see, for example, local governments take over projects

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Speaker 1: or work with property developers to take over projects where

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Speaker 1: the developers too indebted. But the problem in the short

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Speaker 1: term is the banks don't want to lend to indebted

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Speaker 1: property developers if they don't think they're going to be

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Speaker 1: paid back. So we're starting to see talks hasn't been

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Speaker 1: confirmed of actually a real estate fund set up between

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Speaker 1: banks and local developers to inject to help finish off

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Speaker 1: some of these projects. We need that confidence, we need

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Speaker 1: that transparency to put a floor on that on that market.

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Speaker 1: But I think there's more pressure to do that given

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Speaker 1: the slowdown in the economy. So what about risk did

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Speaker 1: the financial system in China as a result of that?

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Speaker 1: Is that something that you're concerned about. We're not. We're

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Speaker 1: not concerned about the systemic risk in the sense that

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Speaker 1: the policy banks are strong, they're well backed there in effect,

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Speaker 1: of course, have stakes from the China government and implicit

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Speaker 1: backing as well. But the issue is broader is what's

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Speaker 1: the hit to growth because the property prices you know,

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Speaker 1: are dropping. The US is just now perhaps starting. That

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Speaker 1: effects consumer confidence, that effects spending, and it's the economic

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Speaker 1: impacts which were more concerned about than a financial crisis.

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Speaker 1: In fact, what the China goodments you're trying to do

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Speaker 1: is bring down property prices. They were worried a few

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Speaker 1: years ago about actually that becoming too expensive and unaffordable

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Speaker 1: for most citizens. Are trying to put a floor on

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Speaker 1: property prices. But of course if you combine that with

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Speaker 1: COVID and everything that's happened, we've had a much bigger

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Speaker 1: downtour than expected. Prison great to have your insights. I

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Speaker 1: think we're talking to you on TV in a couple

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Speaker 1: of hours as well. Pushapaianni is Asia c I O

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Speaker 1: at BNP Parablele Wealth Management with us here from Singapore

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Speaker 1: on Bloomberg Daybreak Asia