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Speaker 1: Our guest is Stephen Davis, founder and CEO of Javelin

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Speaker 1: Wealth Management. Stephen, I'll give you a choice. You want

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Speaker 1: to talk first about the UK or China and shijumping speech,

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Speaker 1: Let's talk about the fun thing that's all about China first, Okay,

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Speaker 1: So I suppose Um there was there was some thinking

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Speaker 1: that he would bring in this sort of development and

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Speaker 1: security as as equal goals going forward. He didn't quite

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Speaker 1: do that, but he talked so much about China on

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Speaker 1: the global stage, and and you know, bringing bringing Taiwan

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Speaker 1: back into the fore and and having already achieved it

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Speaker 1: with with Hong Kong. What what do you think the

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Speaker 1: speech means basically for investors? Um? I guess that if

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Speaker 1: investors were looking for Um a potential early head, not

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Speaker 1: that that was going to be a change of tack,

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Speaker 1: particularly as regards zero COVID, particularly as regards property sector

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Speaker 1: in the crackdown on tech. We got none of those

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Speaker 1: from the match each. Obviously, that was the opening speech

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Speaker 1: for the Party Congress, so you kind of expect more generalities,

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Speaker 1: but the list of specifics was very short, and the

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Speaker 1: lists of generalities, which we've heard many times befall, was

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Speaker 1: pretty long. And it's very short in terms of perhaps

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Speaker 1: some of the policy support that we might have been

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Speaker 1: expecting could be outlined. What happens next then, given we've

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Speaker 1: already got such lower growth forecast for China's economy, well,

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Speaker 1: I guess it's it means probably more of the same.

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Speaker 1: So the Chinese government and the Chinese Central Bank have

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Speaker 1: been gradually easing both interest rates and lending policies to

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Speaker 1: provide a bit of support for the property sector. They've

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Speaker 1: given the problems that abound there largely as a result

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Speaker 1: of changes in those very same government policies. It's going

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Speaker 1: to be a while before we see any significant improvements.

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Speaker 1: So that's going to act um as a still quite

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Speaker 1: significant pressure on the economy. It means that growth rates

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Speaker 1: you're going to remain fairly anemic, and it means that

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Speaker 1: that crucial number of youth unemployment is going to remain

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Speaker 1: high for the sustieable future. This was a sort of

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Speaker 1: chest beating speech by the President and the General Secretary.

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Speaker 1: He said that China is an admired alternative model for

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Speaker 1: the globe on on development that has a different path

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Speaker 1: than what is currently the post Second World War system

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Speaker 1: led by the US almost implying that there would be

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Speaker 1: many out there that would embrace that path. Do you

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Speaker 1: do you see a lot of nations aspiring to be

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Speaker 1: more like China? Um No. I think that a lot

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Speaker 1: of nations, however, are treading a very wary path between

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Speaker 1: those two incredibly powerful um supernational blocks, one led by

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Speaker 1: the U S and the other increasingly led by China.

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Speaker 1: Particularly out here in Asia. Obviously, we're very well aware

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Speaker 1: of the fact that countries are very careful not to

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Speaker 1: antagonize either party, and as a result are trying to

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Speaker 1: please both, which which means a policy of continued aggressive neutrality,

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Speaker 1: if you will, on the part of most people. They

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Speaker 1: recognize that China is an important economic power, and it's

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Speaker 1: growing in influence as a strategic and military power, and

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Speaker 1: you want to make sure that you've got the best

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Speaker 1: of the first and a little of the second. Let's

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Speaker 1: quickly talk about your broad view on Asia and where

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Speaker 1: you see opportunity. I know you're looking at Japan. We've

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Speaker 1: got the yen at one spot five one on watch

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Speaker 1: for intervention as well. What stands out to you in Japan? Well,

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Speaker 1: it's exactly that it's the weakness of the yen and

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Speaker 1: at some point that's going to turn around. It is

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Speaker 1: perhaps a little bit surprising that the bank in Japan

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Speaker 1: is still maintaining that very very loose monetary policy Corona.

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Speaker 1: The central bank governor as made it very clear that

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Speaker 1: he wants to see good inflation, if you will, rising

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Speaker 1: more sharply than it has done for many, many decades.

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Speaker 1: At the moment, the bj is still standing pat and

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Speaker 1: shows very little inclination to to intervene to store the

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Speaker 1: end that that's what means the inflation is going to

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Speaker 1: continue to rise because obviously energy costs are priced in

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Speaker 1: US dollars and the end weakened sharply against the US

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Speaker 1: this year. Stephen Davies found in CEO at Javelin Wealth

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Speaker 1: Management who is also joining us from Singapore, and talk

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Speaker 1: about what we can expect in UK assets. The guilt

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Speaker 1: market very much in focus with the Bank of England

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Speaker 1: exit leaving. I guess it exposed somewhat and we're seeing

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Speaker 1: the pound rally this morning. In Asia. What more has

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Speaker 1: really needed to be done here to restore market credibility. Well,

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Speaker 1: I think that they've managed to repair a bit of

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Speaker 1: the damage over the weekend. By the previous Chancellor Quality

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Speaker 1: Karteng falling on his sword and making rooms for a

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Speaker 1: champion of economic orthodoxy, which Liz Trust and Quasi Karteng

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Speaker 1: had randomly discounted when they were elected in by the

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Speaker 1: Tory Party. So we're going to get a return back

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Speaker 1: to that orthodoxy. It's been very clear from Jeremy Hunt's

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Speaker 1: statements over the weekend that unfunded tax cuts won't fly

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Speaker 1: and the markets are probably going to like that. Is

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Speaker 1: there any likelihood that will see other examples of this

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Speaker 1: instances where you have this battle between the government and

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Speaker 1: the central bank. Well, absolutely, I mean I think that

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Speaker 1: what we're seeing at the moment is a real battle

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Speaker 1: in markets around the world between central banks whose mandate

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Speaker 1: is to cross inflation and central governments whose mandate is

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Speaker 1: to keep the population happy. Um, and you're not going

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Speaker 1: to be able to make both of those two things

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Speaker 1: square off. And at the moment, the inflation of hawks

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Speaker 1: are winning. But you can see because of the strength

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Speaker 1: the US dollar, because of the fact that's fed wag

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Speaker 1: out in front versus other central banks, you're beginning to

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Speaker 1: see a lot of stresses and strains coming out in

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Speaker 1: the system. And it's a question of which breaks first,

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Speaker 1: whether or not it's inflation or economies and politics. And

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Speaker 1: at the moment it's economy and politics that are seeing

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Speaker 1: the pressure so strikes in fromance. That's another symptom in

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Speaker 1: terms of which breaks first. I mean that the energy

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Speaker 1: crisis that Europe is facing also very dire. How much

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Speaker 1: have markets, I guess priced in a lot of the

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Speaker 1: recessionary fears and the downturn that you are seeing in

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Speaker 1: Europe um probably not as much as we think. The

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Speaker 1: reason why we're seeing such enormous volatility at the moment

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Speaker 1: is that markets are hoping that enough has been done

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Speaker 1: to crush inflation, and at the moment, data is saying otherwise.

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Speaker 1: So the noises out of a said about more aggressive

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Speaker 1: rate increases coming in towards the end of the year,

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Speaker 1: possibly into the early part of next year, is all

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Speaker 1: part of the new music that Central Bats are trying

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Speaker 1: to create to say, we're going to be looking at

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Speaker 1: the data and don't expect any freebees until the data

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Speaker 1: turns in the way that we wanted to do. So

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Speaker 1: it's a complicated environment to invest in. We haven't talked

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Speaker 1: too much about your views about how to deploy new capital.

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Speaker 1: Would you even be deploying new capital at the moment.

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Speaker 1: In a word, no, I think the sensible thing to

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Speaker 1: do is to take advantage of those higher interest rates

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Speaker 1: leaded on term depolit for a little while. It is

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Speaker 1: true that there are some alternative assets which are negatively correlated,

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Speaker 1: and those are actually doing pretty well. Secondly, various types

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Speaker 1: of cp A strategy seems to have done extraordinarily well

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Speaker 1: during the course of two So they're having the day

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Speaker 1: in the sun at the moment. But in certainly volatile times,

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Speaker 1: what performing strongly today can just as equally turned to

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Speaker 1: a massive underperforming tomorrow. So until we're clearer the direction

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Speaker 1: for economy's interest rates and inflation, I think it may

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Speaker 1: it makes sense to remain surly prevent so dollars remains strong.

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Speaker 1: We touched on the year earlier. What kind of I guess,

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Speaker 1: further worries do you have for some of these Asian

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Speaker 1: economies with a strong dollar. Well, it's the Asian economies

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Speaker 1: are in a better position than they were let's say,

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Speaker 1: the Asian financial crisis in the late nine when they

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Speaker 1: had a lot of dollars in nominated debt. So a

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Speaker 1: lot of that has obviously been retired paid down, more

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Speaker 1: has been issued in local currencies. The presses on government

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Speaker 1: finances perhaps not as acute as they were twenty plus

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Speaker 1: years ago, but nonetheless, you know, the strong dollar does

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Speaker 1: mean that people are paying a lot more for key

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Speaker 1: oil and energy prices than they were a year ago,

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Speaker 1: and that's causing trouble alright, Stephen, A pleasure, thank you.

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Speaker 1: Stephen Davies, founder and CEO at Javlin Wealth Management, on

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Speaker 1: the line from Singapore for us here on Bloomberg Daybreak.

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Speaker 1: As you