1 00:00:00,160 --> 00:00:02,680 Speaker 1: Let's get to our guest. Paul Gambles is with us. 2 00:00:02,680 --> 00:00:05,760 Speaker 1: Paula's co founder, also a managing partner at m b 3 00:00:06,360 --> 00:00:09,760 Speaker 1: MG Group. He's on the line from Bangkok. Paul, thanks 4 00:00:09,760 --> 00:00:11,960 Speaker 1: for being with us. Quite a sell off yesterday in 5 00:00:12,000 --> 00:00:13,880 Speaker 1: Hong Kong. Would you be a buyer here of some 6 00:00:13,960 --> 00:00:18,560 Speaker 1: of these Chinese equities? Hey, good morning, Yes, I think 7 00:00:18,720 --> 00:00:20,520 Speaker 1: in a in a kind of cautious way, we would. 8 00:00:21,120 --> 00:00:23,200 Speaker 1: Doug and I have just been discussing that cell down 9 00:00:23,200 --> 00:00:25,640 Speaker 1: that we've seen in Chinese tech. I mean you mentioned 10 00:00:26,480 --> 00:00:29,960 Speaker 1: Chinese stocks or something you would look at UM. What 11 00:00:30,040 --> 00:00:32,320 Speaker 1: about TICK though? Is has there more to come if 12 00:00:32,320 --> 00:00:35,880 Speaker 1: we reach the bottom yet? Hi? Gent, sorry again about 13 00:00:36,000 --> 00:00:40,720 Speaker 1: the technical problem. So UM, Look, I think that nobody 14 00:00:40,760 --> 00:00:44,159 Speaker 1: knows where the actual bottom is coming, both in UM, 15 00:00:44,440 --> 00:00:49,360 Speaker 1: in China equities generally, and in China tech. But I 16 00:00:49,440 --> 00:00:51,760 Speaker 1: think what we do know is that you know, this, 17 00:00:51,760 --> 00:00:56,000 Speaker 1: this latest UM sort of quite dramatic leg down definitely 18 00:00:56,000 --> 00:00:58,639 Speaker 1: represents a buying opportunity. I think I think we'd say 19 00:00:58,680 --> 00:01:01,279 Speaker 1: to anybody that you know you want to you want 20 00:01:01,320 --> 00:01:04,680 Speaker 1: to be buying into this market in in phases because 21 00:01:05,600 --> 00:01:07,039 Speaker 1: you know there could be a lot worse to come, 22 00:01:07,040 --> 00:01:10,039 Speaker 1: it's it's it's hard to imagine now that there's anything 23 00:01:10,080 --> 00:01:13,160 Speaker 1: that's not priced in after yesterday. But I think, you know, 24 00:01:13,200 --> 00:01:15,880 Speaker 1: we've got to look at the key drivers. And Paul, 25 00:01:15,920 --> 00:01:17,600 Speaker 1: when we left off, you were talking about some of 26 00:01:17,600 --> 00:01:20,959 Speaker 1: the key drivers behind what we saw in terms of 27 00:01:20,959 --> 00:01:24,960 Speaker 1: the selling yesterday. What are you watching here? What are 28 00:01:25,000 --> 00:01:27,319 Speaker 1: the key drivers? Is it fear, as Doug suggested, of 29 00:01:27,520 --> 00:01:31,000 Speaker 1: pretty much one man rule and no reformists in China anymore? 30 00:01:32,319 --> 00:01:35,160 Speaker 1: Absolutely so, you know, and we've got to remember, you know, 31 00:01:35,240 --> 00:01:39,520 Speaker 1: John Templeton's famous aphorism that you know, you buy when 32 00:01:39,520 --> 00:01:42,600 Speaker 1: there's fear, when when there's when there's metaphorical blood on 33 00:01:42,640 --> 00:01:44,280 Speaker 1: the streets. And I think, you know, I think that's 34 00:01:44,280 --> 00:01:45,720 Speaker 1: what's going on at the moment. I think a lot 35 00:01:45,760 --> 00:01:51,000 Speaker 1: of it is simply, you know, Western incomprehension of the 36 00:01:51,040 --> 00:01:53,080 Speaker 1: way that that China works. You know, if if we 37 00:01:53,120 --> 00:01:55,360 Speaker 1: look at what's happened in the UK over the last 38 00:01:55,360 --> 00:01:57,880 Speaker 1: few weeks, we've seen, you know what happens when you 39 00:01:57,880 --> 00:02:02,200 Speaker 1: get a party divided against itself that can't operate effectively 40 00:02:02,320 --> 00:02:05,279 Speaker 1: with its own central bank. Well, you know, in China, 41 00:02:05,800 --> 00:02:07,840 Speaker 1: I don't think we have that risk at all. I think, 42 00:02:07,840 --> 00:02:11,160 Speaker 1: you know, yes, consolidation of power might look like something 43 00:02:11,200 --> 00:02:14,680 Speaker 1: that's unfamiliar to to Western observers, but I am I 44 00:02:14,720 --> 00:02:18,560 Speaker 1: don't think that it's necessarily a negative in terms of 45 00:02:18,560 --> 00:02:23,560 Speaker 1: where we price Chinese economic activity, Chinese corporate profitability, UM, 46 00:02:23,720 --> 00:02:26,760 Speaker 1: stimulus policy. I don't think it's a negative in terms 47 00:02:26,760 --> 00:02:28,520 Speaker 1: of any of those. I think, if if anything, it's 48 00:02:28,520 --> 00:02:31,920 Speaker 1: either neutral or positive so UM or, I don't think 49 00:02:32,080 --> 00:02:36,399 Speaker 1: anything is deteriorated in the longer term, democratic or versus autocratic. 50 00:02:36,680 --> 00:02:38,880 Speaker 1: And then that brings us to the US and some 51 00:02:39,000 --> 00:02:42,360 Speaker 1: of the restrictions now being placed on China where the 52 00:02:42,400 --> 00:02:46,400 Speaker 1: exportation of high certain high technologies and I'm thinking of 53 00:02:46,440 --> 00:02:51,600 Speaker 1: the semiconductor making equipment UM in one example. Don't you 54 00:02:51,680 --> 00:02:54,919 Speaker 1: think that has the power to kind of really constrain 55 00:02:55,080 --> 00:02:58,960 Speaker 1: economic growth for China, particularly in in the high tech space. 56 00:03:00,639 --> 00:03:02,840 Speaker 1: I don't think that that's that's particularly news. I mean, 57 00:03:02,880 --> 00:03:05,120 Speaker 1: that's a trend that we've seen coming for for some time, 58 00:03:05,160 --> 00:03:07,480 Speaker 1: and I think to a large extent, you know that 59 00:03:07,480 --> 00:03:09,480 Speaker 1: that is priced in. You know, the Huawei thing has 60 00:03:09,480 --> 00:03:12,080 Speaker 1: been going on for a few years now, so I 61 00:03:12,120 --> 00:03:14,760 Speaker 1: think to some extent that's that's priced in But but 62 00:03:14,800 --> 00:03:17,400 Speaker 1: I also think that you know, what what what we 63 00:03:17,560 --> 00:03:20,400 Speaker 1: what We're going to see The real key for China 64 00:03:20,480 --> 00:03:24,320 Speaker 1: for the next decade is this pivot from being you know, 65 00:03:24,440 --> 00:03:28,040 Speaker 1: the the global manufacturer, the global exporter, to to actually 66 00:03:28,040 --> 00:03:31,320 Speaker 1: being able to foster a lot more domestic consumption to 67 00:03:31,360 --> 00:03:35,160 Speaker 1: replace that. And and I think that you know, the 68 00:03:35,640 --> 00:03:38,680 Speaker 1: what we've seen come out of the at the Party 69 00:03:38,720 --> 00:03:42,160 Speaker 1: meeting doesn't do anything to to to really harm that. 70 00:03:42,240 --> 00:03:45,200 Speaker 1: I mean, you know, the key issues are really you know, 71 00:03:45,200 --> 00:03:47,440 Speaker 1: there's somewhere else that we've got to be looking at 72 00:03:47,440 --> 00:03:51,600 Speaker 1: how well China can fix its own property sector problems. 73 00:03:51,640 --> 00:03:54,520 Speaker 1: That's that's been a big hit to GDP this year, 74 00:03:54,880 --> 00:03:58,160 Speaker 1: and normally it's a positive for GDP. So how quickly 75 00:03:58,200 --> 00:04:00,200 Speaker 1: are they going to turn that around. We don't think 76 00:04:00,240 --> 00:04:03,440 Speaker 1: they're going to promote rampant, rampant property speculation as they 77 00:04:03,520 --> 00:04:04,800 Speaker 1: have in the past. We don't think they're going to 78 00:04:04,840 --> 00:04:07,280 Speaker 1: go back to the days where where property you know, 79 00:04:07,360 --> 00:04:10,480 Speaker 1: provided one and a half percent of GDP. But but 80 00:04:10,560 --> 00:04:12,120 Speaker 1: we do think that it's going to go back to 81 00:04:12,160 --> 00:04:14,280 Speaker 1: being net positive as opposed to being a one and 82 00:04:14,280 --> 00:04:16,680 Speaker 1: a half percent negative. We think at some point they're 83 00:04:16,680 --> 00:04:18,760 Speaker 1: going to be ready to reopen, I think, and that's 84 00:04:18,839 --> 00:04:21,120 Speaker 1: that's really the key. The big issue for China is 85 00:04:21,200 --> 00:04:24,200 Speaker 1: when they're able to coalesce around a reopening that they're 86 00:04:24,200 --> 00:04:28,720 Speaker 1: able to support with stimulus policy. And maybe you could 87 00:04:28,800 --> 00:04:31,120 Speaker 1: argue that that having you know, g in a lot 88 00:04:31,160 --> 00:04:34,640 Speaker 1: more control gives him a lot more power to delay that. 89 00:04:34,800 --> 00:04:36,600 Speaker 1: But I also think it means that when it happens, 90 00:04:36,800 --> 00:04:39,880 Speaker 1: it's going to reopening is going to be more effective. Yeah, 91 00:04:39,880 --> 00:04:42,320 Speaker 1: that is the big macro event the world seems to 92 00:04:42,360 --> 00:04:44,520 Speaker 1: be waiting for. But we've got about a minute remaining. 93 00:04:44,600 --> 00:04:48,600 Speaker 1: Just in terms of property, I mean, with Poertner utterly consolidated, 94 00:04:49,200 --> 00:04:51,600 Speaker 1: do you expect a big stick approach to the sector 95 00:04:51,640 --> 00:04:54,880 Speaker 1: to try and fix all these problems? Yeah, I think, 96 00:04:55,000 --> 00:04:56,440 Speaker 1: I mean, I think that was going to happen anyway. 97 00:04:56,480 --> 00:04:57,960 Speaker 1: I just think that the stick is probably gonna be 98 00:04:57,960 --> 00:04:59,800 Speaker 1: a bit bigger and a bit more effective than Therefore, 99 00:05:00,279 --> 00:05:02,640 Speaker 1: That's why we think that you'll get You'll get a fix. 100 00:05:02,800 --> 00:05:05,359 Speaker 1: It'll shake out the speculation, it will shake out some 101 00:05:05,400 --> 00:05:08,320 Speaker 1: of the some of the players, but it'll ultimately probably 102 00:05:08,360 --> 00:05:11,640 Speaker 1: positive for for the sector. But in a way that, 103 00:05:11,680 --> 00:05:13,440 Speaker 1: as I say, constrains it I mean, you have to 104 00:05:13,440 --> 00:05:16,720 Speaker 1: remember that property doing well actually does take money out 105 00:05:16,720 --> 00:05:18,800 Speaker 1: of more productive parts of the economy. So that's one 106 00:05:18,839 --> 00:05:22,640 Speaker 1: way of actually promoting better domestic consumption going forwards if 107 00:05:22,680 --> 00:05:25,440 Speaker 1: spend is likely to be directed to something other than property. 108 00:05:25,520 --> 00:05:29,200 Speaker 1: So I think this is a buying opportunity. I'm certainly 109 00:05:29,240 --> 00:05:31,120 Speaker 1: not saying it's the bottom. I've been around too long 110 00:05:31,160 --> 00:05:33,240 Speaker 1: to say that this is the bottom. We could get lower. 111 00:05:33,360 --> 00:05:35,560 Speaker 1: But you know what I think if you, if you 112 00:05:35,680 --> 00:05:39,280 Speaker 1: if you take exposure to China, especially domestic China smaller companies, 113 00:05:39,480 --> 00:05:41,960 Speaker 1: you take that at this stage, even China tech, which 114 00:05:41,960 --> 00:05:45,440 Speaker 1: is more speculative, I think if you know three, four year, 115 00:05:45,520 --> 00:05:48,360 Speaker 1: five years time horizon, you're gonna be very happy. Alright. 116 00:05:48,360 --> 00:05:51,040 Speaker 1: Paul Gamble's co founder and managing partner at m b 117 00:05:51,440 --> 00:05:53,360 Speaker 1: MG Group, Thanks so much for joining us.