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Speaker 1: Seven and a half minutes past the out Let's get

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Speaker 1: to our guest, Fabiana Fideli, ce IO of Equities and

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Speaker 1: Multi Asset at M and G. Fabiana, right now, the

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Speaker 1: macro seems to be holding sway over everything. It's bond

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Speaker 1: yields that are really driving the bus, UH, and it's

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Speaker 1: it's perilous I think to get seduced by the earnings.

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Speaker 1: We've had some good earnings and the stocks have responded

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Speaker 1: well over a day or two, but there's no guarantee

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Speaker 1: that they would be sustainable. So what is what's the

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Speaker 1: strategy right now? How are you looking at investing in

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Speaker 1: various assets? Good morning, Brian. You're right there a series

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Speaker 1: of contradicting often UH news flows that are really affecting

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Speaker 1: market sentiment and volatility in this kind of market. With

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Speaker 1: actually telling our clients, look, if you have a three

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Speaker 1: plus year outlook in terms of investment horizon, and you

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Speaker 1: don't mind intermediate volatility, this is as good as a

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Speaker 1: time as ever to buy into the market, whether it

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Speaker 1: is on the um, on the equity side, or also

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Speaker 1: on the corporate bond side. However, if you do care

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Speaker 1: about volatility, if you have a shorter term outlook, Um,

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Speaker 1: think about the next two to three, three to six months, Um,

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Speaker 1: you really need to think about. This market is a

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Speaker 1: more idosyncratic market. So we have been telling our clients

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Speaker 1: that this is not a market for broad strokes investing.

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Speaker 1: It's not a market for sweeping micro calls or sector calls.

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Speaker 1: It's more a market market where you're looking for stock

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Speaker 1: and corporate bonding asyncratic elements and you literally UH find

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Speaker 1: your best bets and there are a lot of them

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Speaker 1: because when you see these bouts of pessimists, there's a

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Speaker 1: lot of sell off and the baby's get thrown out

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Speaker 1: with the bath water. So what are the best bets

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Speaker 1: for that short term horizon? In look, we have actually

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Speaker 1: found some interesting, some interesting opportunities in Japan where we

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Speaker 1: see the the restructuring and the stewardship seem really taking place.

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Speaker 1: I mean you've seen an increased in shareholder returns, a

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Speaker 1: lot of company restructurings M and A, s UM and UH,

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Speaker 1: and also an improvement in operating efficiency from a lot

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Speaker 1: of companies. Again, you have to be very selective, but

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Speaker 1: we do find candidates there. We also find candidates in

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Speaker 1: technology for example, well in UH in the US and

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Speaker 1: also in Asia. I mean this is a case of

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Speaker 1: um some of the technology companies you've seen, they have

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Speaker 1: had very different earning, some announcements. Some of them have

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Speaker 1: weather the storm storm better than others. Obviously the consumer

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Speaker 1: facing companies that having more issues, but you know a

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Speaker 1: lot of them is already in the price. When you

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Speaker 1: see a big name down seventy, you're tempted to move.

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Speaker 1: But I would remind listeners that only Baba has been

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Speaker 1: down se for probably a full year. Now. Uh, you know,

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Speaker 1: it depends on the conditions going forward, and Bloomberry Economics

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Speaker 1: says next year could be even worse than two. It

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Speaker 1: cites a cold winner and the disruptions in Europe and

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Speaker 1: COVID zero lasting longer in China is just a whole

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Speaker 1: bunch of issues that could weigh in strongly next year.

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Speaker 1: You're right, So would you really have to look for

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Speaker 1: our companies that don't have to fund their earnings, that

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Speaker 1: have strong cash flows. Companies is with a really stronger

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Speaker 1: i P where they do have pricing and market power.

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Speaker 1: So we're probably leaning more towards the hardware rather than

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Speaker 1: the software side or communication services of the economy. We

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Speaker 1: actually underweight across most of our strategies and communications services.

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Speaker 1: That is an area that has done extremely well because

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Speaker 1: of COVID, and obviously you would expect some pullback. We

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Speaker 1: really can't go without talking about what has happened in

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Speaker 1: the UK and the big moves that we've seen in

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Speaker 1: the pound and guilts over the last forty four days.

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Speaker 1: What happens now, It's all going to depend on who

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Speaker 1: takes over from Lee's trust. But do we see less

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Speaker 1: volatility hi Juliet Um, Well, if we're going to see

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Speaker 1: her now less volative, it really depends on what's going

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Speaker 1: to happen over the next week. UM there possibly to

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Speaker 1: um clear her candidates when it is Rishie soon Act

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Speaker 1: the former Chancellor, and the other one is actually Boris Johnson,

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Speaker 1: which is the former Prime Minister. UM Rishie Suna could

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Speaker 1: probably become a more market stabilizing choice of for anything,

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Speaker 1: because Jeremy Hunt, the current Chancellor, the one who has

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Speaker 1: tried to calm markets with a more conventional and strict budget.

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Speaker 1: UM he was aligned with Rashie Sunaka and would have

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Speaker 1: become his chancellor. Should have Rishi Suna being elected at

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Speaker 1: the time when elections happened over the summer. So the

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Speaker 1: good thing here, the good news is that the rules

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Speaker 1: have changed and so instead of having a long drawn

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Speaker 1: election such as we had over the summer, the whole

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Speaker 1: process will only take one week. So at the maximum

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Speaker 1: we would know by next Friday who the new Prime

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Speaker 1: Minister will be. But there's also a chance that we

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Speaker 1: could know as soon as Monday. You know, the markets

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Speaker 1: turned against the UK on a dime, as soon as

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Speaker 1: you've got that package from Liz Trust and from Quasi quarteng.

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Speaker 1: Uh do you think it's a possibility that the markets

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Speaker 1: could turn against let's say, US policymakers on a dime,

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Speaker 1: given that you do actually see quite different approaches between

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Speaker 1: the fiscal side and the monetary side even in the US.

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Speaker 1: You know, Brian, you've raised a very important point. I mean,

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Speaker 1: there's a new variable here. We've been used to a

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Speaker 1: certainly coming from strent of banks raising rates, from inflation numbers,

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Speaker 1: from obviously the war in Ukraine and the actual energy process.

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Speaker 1: But the new variable here is that you could end

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Speaker 1: up in situations where governments decide to have expansionary fiscal

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Speaker 1: policies because then some somehow they have to respond to

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Speaker 1: public opinion. And then you could end up in this

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Speaker 1: counterproductive situation where central banks will be raising race to

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Speaker 1: counteract expansionary fiscal policies that go and put in place.

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Speaker 1: And that's not a good recipe neither for physical health,

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Speaker 1: no forul currencies. Let's talk about the China picture. We

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Speaker 1: actually did see the c s I three D still

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Speaker 1: end lower yesterday, but there was a very big bounce

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Speaker 1: on that news that we could see quarantine reduced. But

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Speaker 1: at the same time we've also got the concerns about

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Speaker 1: the US curbs on tech. How does the China story

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Speaker 1: play out? What wins here? Is it reopening or is

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Speaker 1: it still these I guess geopolitical tensions. It's a bit

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Speaker 1: of both, Juliette Um. You know, when we're looking at China,

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Speaker 1: we obviously are concerned about the domestic economy, the growth,

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Speaker 1: the clearly the zero COVID policy is affecting, affecting activity. Um.

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Speaker 1: It doesn't help that the US is clearly on a

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Speaker 1: far more tense path um with with China. At the

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Speaker 1: same time, some of the companies on the stock market

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Speaker 1: that are really trading at distress levels. So we're maintaining

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Speaker 1: an equal weights stands on on China. We've actually recently

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Speaker 1: increases from it down from an underweight. But really looking

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Speaker 1: at very agrisyncratic stories companies that are less exposed to

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Speaker 1: macro and really have fundamentals that I'm not warranted. But

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Speaker 1: the current price action we highlighted tech policy and government

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Speaker 1: policy in China is being a big reason for the fall.

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Speaker 1: Look at Ali Bama, but if you look at I mean,

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Speaker 1: so the government's betting against the tech, but then the

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Speaker 1: government is betting for EVS and EVS likely atto down

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Speaker 1: from more than two hundred thirty. You know, um, government

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Speaker 1: and intervention is one thing, but the market Indian will

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Speaker 1: find its way. So it's it's really important to understand

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Speaker 1: what the next policies of the central government will be

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Speaker 1: in China. And alright, Fabiana, unfortunately at the time, but

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Speaker 1: thank you as always. Fabiana at l A CIO of Equities,

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Speaker 1: a multi asset imergy on the line from Singapore for

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Speaker 1: us here on Daybreak Asia