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Speaker 1: E Katarina Big Ghosts joining us year for the program

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Speaker 1: take a Closer look at Markets Katarina ce I, O

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Speaker 1: of Core Investments Asia Extra panet Acts Investment Management. So

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Speaker 1: we've been hearing that more and more fund managers Katarina

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Speaker 1: are getting positive on Chinese equities for next year. I

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Speaker 1: raised the question a few moments ago of how much

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Speaker 1: of that is already discounted in markets because we have

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Speaker 1: seen some gains of like particularly for Hong Kong. Your

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Speaker 1: thoughts on that, Yeah, good morning, Brian, thank you for

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Speaker 1: having us. Uh, yeah, clearly, I mean I think there's

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Speaker 1: a positive sentiment on China, and China may prove to

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Speaker 1: be contact cyclical to the to the global growth slow

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Speaker 1: down as we see the the the develop markets, on

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Speaker 1: emerging markets and other parts of the world seeing a

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Speaker 1: slowdown in economic growth. And now this this subject clearly

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Speaker 1: China opening up, and this is a condition that has

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Speaker 1: been reiterated by many Cell side analysts and by ourselves,

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Speaker 1: is that certainly China can achieve their growth potential, but

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Speaker 1: they do have to open or the reopening has to

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Speaker 1: be successful. And as we talked in our views this

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Speaker 1: year or the forecast for next year, we see China

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Speaker 1: opening the economy and kind of three phases, as you

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Speaker 1: might say. First, they all focus on getting the public

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Speaker 1: medically and mentally ready for the change, and we've seen

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Speaker 1: progress in that space for for China moving towards uh,

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Speaker 1: you know, supporting the population medically with high vaccination rates,

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Speaker 1: and certainly we'll focus around the elderly vaccination of elderly population.

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Speaker 1: Then the phase to us we see it is will

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Speaker 1: be emphasis of reopening the domestic economy by easing the

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Speaker 1: social and nobility restrictions. Certainly, the the onshore consumption in

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Speaker 1: China is very powerful, so abound of that consumption next

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Speaker 1: year clearly can be providing a positive support for China economy.

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Speaker 1: And the final step we see it is the China

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Speaker 1: opening the border for the rest of the world, and

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Speaker 1: we see that happening subject to that that two first

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Speaker 1: steps being successful, we see that happening in a second

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Speaker 1: part of the year or two three. Okay, as you

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Speaker 1: just mentioned itself that what we have is a situation

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Speaker 1: where we're going to be having road bumps in this

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Speaker 1: reopening story from China, and that could really also be

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Speaker 1: a headwind naturally, but it is amazing how much about

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Speaker 1: six weeks makes in terms of how people have just

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Speaker 1: turned sentiment in fact short a period, and that turned

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Speaker 1: turned their sentiment towards China. So what do you actually

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Speaker 1: look at if you do think it's going to be

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Speaker 1: counter cyclical. Yeah, and and you know, apart from the

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Speaker 1: opening set condition for China achieving at least the five

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Speaker 1: percent growth that a lot of the soul side al

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Speaker 1: least expected to see it. But certainly there are going

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Speaker 1: to have a growth below that trend. We expect around

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Speaker 1: three percent growth for this twenty two. They have the

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Speaker 1: potential to go to five percent next year. But it's

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Speaker 1: one of the key elements is that reopening or successful

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Speaker 1: reopening allowing for all the fiscal and monetary stimulus that

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Speaker 1: has been put in place in China to filter through

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Speaker 1: the economy or transmit through the economy in a successful way.

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Speaker 1: And then beyond the let's say China reopening excitement, these

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Speaker 1: elements that investors have to look at, things like the

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Speaker 1: housing market downturn, and we've seen certainly a correction in

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Speaker 1: that space, and certainly what the the government will do

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Speaker 1: to support that sector will be very important. The globalization

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Speaker 1: is one of the elements technology restrictions that was in

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Speaker 1: put in place this year, and private sector policies and

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Speaker 1: certainly aging population which are more structural trends that are

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Speaker 1: certainly gonna press on China growth going forward. So they

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Speaker 1: settled that element short term if medium term excitement around

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Speaker 1: the opening, and there's more long term elements that that

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Speaker 1: the investors have to look at what we assess China

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Speaker 1: as an investment opportunity. So to what extended, Katarina, do

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Speaker 1: you think that China reopening and moving forward will exacerbate

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Speaker 1: the inflation problem globally? I mean here central banks, particularly

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Speaker 1: in the West have struggled to bring inflation at least

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Speaker 1: to get it seemingly topping out. Now you have China,

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Speaker 1: which has got a lot of pent up emotion, perhaps

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Speaker 1: adding to those issues. Yeah, and and the the inflation

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Speaker 1: hasn't been an issue this year as we know in China,

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Speaker 1: in fact is below trend despite all the support with

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Speaker 1: simplon monitor and fiscal stimulus due to the restrictions and

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Speaker 1: mobility restriction on kind of the velocity of money that's

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Speaker 1: been put in the economy. And as we see next year,

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Speaker 1: we'll look, as I said, the first step the second

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Speaker 1: of the first step will be getting the population ready.

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Speaker 1: Second is reopening the economy internally, which we hope to

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Speaker 1: support the consumption and will create some level of potential inflation,

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Speaker 1: but as coming at a very low level from very

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Speaker 1: low level, so there's a lot of room to run

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Speaker 1: for inflation in China, so it's not a concern for

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Speaker 1: us as of yet. And as I said, the third

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Speaker 1: step will be the China reopening to the global economy.

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Speaker 1: So we don't see this happening very swiftly. As I said,

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Speaker 1: there will be likely to be a bumpy ride with

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Speaker 1: some elements of monitor around the infection rates and potential

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Speaker 1: risks of the economy closing down again. So if there's

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Speaker 1: any risk concentration, it will be certainly an element that

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Speaker 1: needs to be put or monitored the second if not

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Speaker 1: towards the end of two thousand twenty three, but at

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Speaker 1: the moment it's not an eminent risk. Certainly, the monitory

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Speaker 1: policy and fiscal policy has room in that regard to

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Speaker 1: to move a little bit more next year to support

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Speaker 1: that economic rebound for China. It cactually well, you know,

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Speaker 1: people were thinking once days that China was not investable.

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Speaker 1: There was a larger amount of money which went towards

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Speaker 1: the India. Does it stay there? And well, if it doesn't,

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Speaker 1: and if it does, they where else is a go

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Speaker 1: in Asia as well? Yeah, and and there's other parts

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Speaker 1: of Asia. And aces said of China, there's there's that

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Speaker 1: element of excitement of reopening post COVID. There's a lot

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Speaker 1: of pop demand, there's a lot of pinop investment, if

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Speaker 1: you might say, sitting there to be deployed. But beyond

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Speaker 1: that excitement, there's structural issues that need to address. Uh,

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Speaker 1: you know, places like property. As they said, there are

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Speaker 1: concerns and some elements that we need to look in

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Speaker 1: terms of the globalization. What the impact is, technology restrictions,

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Speaker 1: you know, the private sector policies that I mentioned, and

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Speaker 1: aging population, and the aging population has repercussions on places

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Speaker 1: as well, like property, you know, the property demand and

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Speaker 1: the structural dynamics on how that market will evolve interasting

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Speaker 1: twenty three and beyond. So there's certainly elements where investors

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Speaker 1: have to look at this short term and long term trends.

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Speaker 1: And with regards to Asia, if you look at China,

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Speaker 1: the growth will be as that we expect for US

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Speaker 1: and twenty two to be around the three percent, and

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Speaker 1: this is pretty much the consensus. If you look at

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Speaker 1: Asia or broader Asia, the growth as as quoted by

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Speaker 1: the World Bank is expected to be around five percent.

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Speaker 1: So it's the first time since that China is actually

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Speaker 1: below trend of Asian growth. And when it comes to Asia,

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Speaker 1: you know, the pin up demand has supported the economy

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Speaker 1: or economic velocity in other parts of Asia to bring

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Speaker 1: that region above that Chinese growth into US and twenty two,

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Speaker 1: and places that we see um still continuing to have

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Speaker 1: a positive momentument to US in twenty three are places

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Speaker 1: that are relying to more internal demand rather than exporting economies.

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Speaker 1: So economies that are relying on exports to develop, war particularly,

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Speaker 1: I expected to see somewhat a weaker growth into US

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Speaker 1: and twenty three because we do see a the deceleration

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Speaker 1: of growth in developed markets, economies that are open for tourism,

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Speaker 1: places like Thailand, certainly Japan if you look more broadly,

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Speaker 1: uh and places like economies that are energy exporters rather

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Speaker 1: than energy importers. I expected still to do better in

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Speaker 1: A dozen and twenty three. So again the three kind

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Speaker 1: of pillars, if you might say whatever they're exporting economies

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Speaker 1: or demand internal demand consumers or if there are energy

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Speaker 1: importers or exporters, and selling tourism and as another element

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Speaker 1: that investors need to look at. One vessessing the investment opportunities. Katherina,

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Speaker 1: thank you so much, Bigos the c i O Core

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Speaker 1: Investments at Access Investment Managers getting her take on the markets,

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Speaker 1: particularly for Asia. This is Bloomberg