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Speaker 1: During his now as Alice Chen Investments and the Capital

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Speaker 1: Market Senior Associated Vanek Australia discussing her China markets. Look, Alice,

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Speaker 1: thank you for joining us. When you look at your

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Speaker 1: investment propositions in China, how much attention, how much of

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Speaker 1: it is clouded by what's happening in the property among

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Speaker 1: the property developers. Hi, Richard, thanks for having me here. Yes, indeed,

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Speaker 1: the property market downturn has really been ongoing for a while,

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Speaker 1: and I think it is a crucial problem for the

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Speaker 1: Chinese government to solve as soon as possible because it

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Speaker 1: accounts for twenty of China's GDP. But do you think

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Speaker 1: that there are still pockets of opportunities in the Chinese

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Speaker 1: equity space, especially in the consumer and local I T

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Speaker 1: names You have to be pretty bold. We had a

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Speaker 1: bad July. We have the c s I three D

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Speaker 1: down seven percent. We mentioned that other markets, like in

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Speaker 1: the US the SMP five up nine percent during the month.

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Speaker 1: And in China there's so many problems. There's not just

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Speaker 1: the property crisis, but there's the the COVID flare ups

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Speaker 1: and the lockdowns. Uh, there's there's also policy generally which

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Speaker 1: I think many people would say, hasn't been hasn't been

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Speaker 1: that sound? Actually? Uh, And you've got a manufacturing slowdown now,

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Speaker 1: you had a contraction in July, and you have weak consumption.

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Speaker 1: So who's brave enough to go go along China? Now?

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Speaker 1: It is a good question. Um. We actually had a

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Speaker 1: bit more clarity from the latest poly Polyberum meeting um

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Speaker 1: last week UM that the policy makers are now going

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Speaker 1: to be more lenient towards the platform economy. They said

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Speaker 1: that it will be the end of the targeted reptification

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Speaker 1: for those companies now. So I think in terms of

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Speaker 1: the tech crackdown perspective, it will be put into the

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Speaker 1: back burner for the rest of the year. And we've

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Speaker 1: also been monitoring the momentum in the CSI three hundred

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Speaker 1: space and we can actually see the local I T

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Speaker 1: names gaining more momentum compared to three months ago. So

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Speaker 1: I think investors need to keep a clothes eye in

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Speaker 1: those space. And there might be potential upside with the

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Speaker 1: relaxation of COVID strategy, But the thing is, we just

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Speaker 1: keep on having that zero COVID policy coming in the

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Speaker 1: ruin everything if you wish. But you know, if you

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Speaker 1: had to be invested in China, where would you look? Well,

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Speaker 1: we we like UM consumer stapost names because usually they

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Speaker 1: have a big brand name and they generally have a

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Speaker 1: bigger pricing power because the demand is relatively inelastic, such

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Speaker 1: as food and the beverage UM as I mentioned earlier.

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Speaker 1: We're also like some local I T names such as

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Speaker 1: ball Sides, which is listed in the Asia market. Its

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Speaker 1: main business to digitize the still industry that has historically

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Speaker 1: been one of the brown industries. This is not only

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Speaker 1: UM play in automation but also in playing E s G.

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Speaker 1: As China too is on track to continue its carbon

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Speaker 1: neutrality journey by you know, with a more specific question

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Speaker 1: on the property market, I know it's not your first

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Speaker 1: choice there, but a lot of people would be concerned.

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Speaker 1: And so the question I've been posing this morning is

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Speaker 1: is the main issue for Chinese developers liquidity or solvency.

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Speaker 1: At this moment we are seeing it is still just

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Speaker 1: a liquidity issue. From the data we've seen so far,

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Speaker 1: the mortgage UM non payment suspension accounts for roughly one

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Speaker 1: point four percent of the total outstanding mortgage balance. If

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Speaker 1: it were to turn to bed that it will hit

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Speaker 1: the banking sector for sure, but as as um far

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Speaker 1: as we can see at the moment, it is still

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Speaker 1: manageable based on the p BOC stress test. So I

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Speaker 1: think the bottom line here is p BOC local government

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Speaker 1: and also state on developers really need to work together

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Speaker 1: in a timely manner to prevent the spill over effect

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Speaker 1: to the wider economy. So you know, the thing is

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Speaker 1: that ultimately you have to enter China with a great

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Speaker 1: deal of reputation. And when we talk about local government,

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Speaker 1: I mean local government that is also massive here. And

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Speaker 1: you know how much of an issue is that for

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Speaker 1: using investor, they do have quite significant power, and we

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Speaker 1: believe they will utilize the tools that they have to

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Speaker 1: stimulate the economy, the local economy and to make sure

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Speaker 1: um it is stable for the remaining of the year. Okay,

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Speaker 1: thanks so much for joining us. Really good Alice Alice

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Speaker 1: shan here Investments the Capital Market senior Associate, saying that

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Speaker 1: basically she likes consumer and domestic I T sectors. This

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Speaker 1: is Bloomberg