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Speaker 1: Stephanie holds the n is c Io a packet Dodge

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Speaker 1: Bank International Private Bank, joining us in our Singapore studio.

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Speaker 1: It's great to see you. So we did see stocks

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Speaker 1: turn lower on that Apple news, adding to concerns the

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Speaker 1: fair tightening could land the US in recession. Yours had

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Speaker 1: Goldman Sax planning to pump the brakes on adding people

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Speaker 1: as well. When you look at those corporates slowing down

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Speaker 1: in terms of hiring, what does that tell us about

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Speaker 1: the overall concerns of a global recession. It tells us

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Speaker 1: that these concerns are validated now. So for a while

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Speaker 1: we have been looking forward to this earning season, as

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Speaker 1: you know, thinking that analysts estimates are still fairly constructive

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Speaker 1: and positive, and it puzzled us as to why that

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Speaker 1: is the case. So we came to the conclusion that

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Speaker 1: it's really um for analysts to see first um, how

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Speaker 1: um um the companies will be managing expectations, and that

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Speaker 1: is exactly what we get now. We just got into

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Speaker 1: the second week of those earnings and the expectation was

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Speaker 1: all along that it will be a very volatile period

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Speaker 1: and we just got confirmation of that. Yeah, it's interesting.

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Speaker 1: We heard from IBM today after the bell, the company

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Speaker 1: lowered its forecast for free cash flow this year because

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Speaker 1: largely because, I should say, the impact of a stronger dollar.

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Speaker 1: We've also heard from a number of other companies expressing

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Speaker 1: a little bit of concern about the negative impact of

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Speaker 1: dollar strength for their offshore revenue. Is this something that

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Speaker 1: we're going to hear a lot more about in your view, Well,

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Speaker 1: we are hearing it now and it is fully expected.

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Speaker 1: And it's not just the level as to where we're training.

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Speaker 1: Is also the speed at what the US dollar has

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Speaker 1: been advancing. On the other end of the spectrum, I

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Speaker 1: would like to highlight that Euro weakness is also something

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Speaker 1: that is of concern. And obviously we have the e

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Speaker 1: CB this week coming on. According to the calculations that

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Speaker 1: we have been making is um the Euro trade way,

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Speaker 1: that depreciation would be adding in the short term about

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Speaker 1: half a percent to the inflation pressure that the ECB

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Speaker 1: is already facing. So we have both sides of the

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Speaker 1: equation of your dollar being quite concerning. I agree, And

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Speaker 1: you're talking to about how clarity the outlook is for

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Speaker 1: the Eurozone in general. That's really being driven by what

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Speaker 1: we're saying by the war in Ukraine too, and the

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Speaker 1: energy supply outlook exactly. And of course this week's ECB

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Speaker 1: comes at the same day where we most probably get

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Speaker 1: clarity as to whether a nord stream pipeline will get

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Speaker 1: switched on in full capacity or even UM to the

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Speaker 1: lower forty percent capacity we had before. So it's a

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Speaker 1: particularly challenging UM you know, day and time from that

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Speaker 1: perspective for Europe. Just to clarify, our base case is

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Speaker 1: that Russia will be switching on that pipeline just to

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Speaker 1: also make sure that the leverage that it has UM

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Speaker 1: in regards to UM gas flows is still maintained. Of course,

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Speaker 1: this can be switching on a little bit later, it

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Speaker 1: can be gas flows that are less than before UM,

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Speaker 1: so that's on and off can can happen. And of

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Speaker 1: course the second part is if you switch off gas

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Speaker 1: flows completely, then you will have a spike and ride

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Speaker 1: horizons UH spike and prices and then of course you

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Speaker 1: won't be able to participate if you're the one delivering

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Speaker 1: this UM and not UM you know, reaping in the

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Speaker 1: revenues on the back of that. So this is where

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Speaker 1: that forecast comes from, and that's one of the reasons

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Speaker 1: we're saying this shaky outlook and also in terms of

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Speaker 1: the property market too, but you're remaining fairly bullish on

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Speaker 1: Chinese Stephanie. That is correct. So we have always been

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Speaker 1: very cautious in regards to the property segment of the market. Um,

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Speaker 1: you know, not only given the experience we had last year,

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Speaker 1: but also quite knowing that there's still more consolidation to come.

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Speaker 1: You know, what's happening right now is obviously these mortgage

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Speaker 1: repayments aren't delivered because the consumer isn't able to pay.

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Speaker 1: It's because they are checks that have been stalling and

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Speaker 1: not being fulfilling their obligations. And because it is of

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Speaker 1: that nature, the government has actually several ways of tackling this,

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Speaker 1: which we're quite confident that they will be doing it,

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Speaker 1: given the objectives that they have said in terms of

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Speaker 1: um their social agenda. So we have already seen that

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Speaker 1: banks will come out with the mortgage holiday. I think

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Speaker 1: there will be a possibilities of maybe injecting liquidity ease

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Speaker 1: on the developer side, maybe buying back land to make

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Speaker 1: sure some of these projects can go along. So we

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Speaker 1: see this part being tackled. But you're absolutely right, the

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Speaker 1: focus has come back to the negativity around China. Um,

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Speaker 1: it's COVID on and off of zero COVID strategy being displayed,

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Speaker 1: and then also the property sector that um, you know,

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Speaker 1: that adds just to the overall risk sentiment that isn't

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Speaker 1: improving on a global scale. Stephanie, I'm curious about the

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Speaker 1: extent to which you are fully invested right now, or

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Speaker 1: whether or not you're sitting on a little bit of

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Speaker 1: dry powder, so to speak. Are do you are you

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Speaker 1: holding right now or recommending that clients hold a considerable

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Speaker 1: amount of cash at this point if we're expecting a

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Speaker 1: little bit more downside. Well, the recommendation has been all

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Speaker 1: along that it's not a market to totally go out

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Speaker 1: and get this invested. You know, it is still a

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Speaker 1: market where you can invest cash is obviously is something

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Speaker 1: that as you call it, dry powder, that's good to have,

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Speaker 1: but given the inflation rate, um, it is kind of

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Speaker 1: burning a hole in your pocket as well. So a

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Speaker 1: better way, most properly is to put this in very

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Speaker 1: short term investment grade bond kind of investments where you

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Speaker 1: can also park money and have a high liquidity portion

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Speaker 1: to then go back into the other segments of the

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Speaker 1: market once you see that risk sentiments stabilizing, So tell

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Speaker 1: us exactly where you're putting it, because you mentioned Chinese equities,

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Speaker 1: but you like Asia ex Japan as a whole. That

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Speaker 1: is correct. So we have been cautiously optimistic on the

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Speaker 1: Chinese tease, as you said, and also Asia ex Japan,

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Speaker 1: especially looking at the second half of the year. The

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Speaker 1: big overarching question is can the local markets really whether

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Speaker 1: the storm that is going on in terms of the

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Speaker 1: global headwinds that we're seeing. So our preference in terms

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Speaker 1: of investing is to wait for volatility to have calmed

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Speaker 1: down first to then go back in. So we have

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Speaker 1: actually um neutral on these agent investments, looking for that

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Speaker 1: opportunity that good timing to go back in the market.

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Speaker 1: And we are also on the technical scale obviously underweight

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Speaker 1: uh something like Europe in the US at that stage.

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Speaker 1: So talk to me a little bit about not necessarily

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Speaker 1: jurisdictions that you're avoiding, but themes or industries that you

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Speaker 1: don't believe have much in a way of upside here

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Speaker 1: as we look out over the next six months or

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Speaker 1: a year, well, or rather look at the ones where

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Speaker 1: you would want to invest because you still have longer

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Speaker 1: term struct themes supporting UH these areas and UM, I

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Speaker 1: think that is that is a more constructive way of

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Speaker 1: advising clients at the moment um. So if you have

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Speaker 1: a longer term um UM themes like healthcare for instance,

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Speaker 1: we have been going on about this, or you pick

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Speaker 1: the companies that have a you know, a robust and

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Speaker 1: high quality UH to it in terms of the themes

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Speaker 1: and the way they can for instance, pass on price

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Speaker 1: increases right now. So it's it's very much a case

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Speaker 1: by case story, um to to go back into the market, Stephanie,

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Speaker 1: thanks for coming in as always, definitely holds the n

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Speaker 1: c I O A Packett Deutsche Bank International Private Bank

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Speaker 1: with us here in the Singapore studio on Daybreak Asia