1
00:00:00,080 --> 00:00:03,040
Speaker 1: Let's say good morning to our guest, Jin You, whose

2
00:00:03,080 --> 00:00:08,680
Speaker 1: investment specialist multi asset solutions at JP Morgan Asset Management. Jin.

3
00:00:08,920 --> 00:00:11,479
Speaker 1: We just heard Dug a few moments ago ticking through

4
00:00:11,520 --> 00:00:14,160
Speaker 1: some of the positives in the marketplace, and so we

5
00:00:14,200 --> 00:00:17,240
Speaker 1: had a big rally on Wall Street and in fact

6
00:00:17,280 --> 00:00:19,680
Speaker 1: in Europe earlier, and it looks like that's the kind

7
00:00:19,720 --> 00:00:22,639
Speaker 1: of day it will be in Asia today. But I

8
00:00:22,760 --> 00:00:26,040
Speaker 1: suppose many investors still feel as though we're in a

9
00:00:26,040 --> 00:00:29,080
Speaker 1: bear market and this is just a continuation of a

10
00:00:29,240 --> 00:00:32,120
Speaker 1: of a bear market rally. Is that the right way

11
00:00:32,159 --> 00:00:36,159
Speaker 1: to look at it? Um? Our view right now is

12
00:00:36,200 --> 00:00:39,200
Speaker 1: actually continued to be quite questious on the market. Um.

13
00:00:39,280 --> 00:00:42,479
Speaker 1: We do expect that we are going to have an

14
00:00:42,479 --> 00:00:47,519
Speaker 1: extended period of sub trans growth. UM. Therefore, we are

15
00:00:48,240 --> 00:00:52,040
Speaker 1: pretty kind of defensively positioned across our multi asset portfolios.

16
00:00:52,520 --> 00:00:56,120
Speaker 1: UM so we do have yeah, Julia, Yeah, I'm sorry. Continue.

17
00:00:57,040 --> 00:00:58,880
Speaker 1: I was told we do wanted to ask where you work,

18
00:00:58,960 --> 00:01:02,040
Speaker 1: where you were a position there? Oh? Yeah? Um, so

19
00:01:02,160 --> 00:01:05,640
Speaker 1: we are underweight in equities. UM. We do think there's

20
00:01:05,680 --> 00:01:09,120
Speaker 1: downside risk to margins and the revenues in the next

21
00:01:09,280 --> 00:01:12,960
Speaker 1: six to twelve months, and We're neutral on duration UM,

22
00:01:13,000 --> 00:01:14,880
Speaker 1: but we do think that there is a two way

23
00:01:14,959 --> 00:01:19,120
Speaker 1: risk to where you will gonna move forward, And we

24
00:01:19,200 --> 00:01:23,000
Speaker 1: are also neutual on credit UM. We do prefer higher

25
00:01:23,120 --> 00:01:26,480
Speaker 1: quality assets though, so we do prefer i g. Credit

26
00:01:26,760 --> 00:01:29,640
Speaker 1: UM to UM equities and also to high you on

27
00:01:29,680 --> 00:01:32,399
Speaker 1: a relative basis. One of the apparent dislocations at the

28
00:01:32,440 --> 00:01:36,360
Speaker 1: moment is the earnings seem out of sync with the

29
00:01:36,400 --> 00:01:40,360
Speaker 1: negativity UM. Are earnings going to catch down as it

30
00:01:40,400 --> 00:01:43,560
Speaker 1: were in the coming quarter or two? Yeah, that's pretty

31
00:01:43,640 --> 00:01:45,800
Speaker 1: much our base case scenario. We do think that if

32
00:01:45,800 --> 00:01:50,040
Speaker 1: you look at UM kind of bottom up consensus earnings forecast,

33
00:01:50,400 --> 00:01:53,200
Speaker 1: it still looks too high. So there is going to

34
00:01:53,320 --> 00:01:56,960
Speaker 1: be UM some further downside well looking. Yeah, whether or

35
00:01:57,040 --> 00:01:59,320
Speaker 1: not this recession is already in place or if it

36
00:01:59,360 --> 00:02:01,160
Speaker 1: does set in, what does that mean for the fair?

37
00:02:01,200 --> 00:02:05,160
Speaker 1: Do you think they keep raising rates regardless? UM. We

38
00:02:05,520 --> 00:02:09,880
Speaker 1: think that UM FAT is likely going to prioritize inflation

39
00:02:10,040 --> 00:02:13,640
Speaker 1: over growth UM given that inflation is very much a

40
00:02:13,680 --> 00:02:17,880
Speaker 1: dominant concern right now, so UM FAT will continue to

41
00:02:18,240 --> 00:02:21,760
Speaker 1: pretty aggressively tighten the policy. UM. You know, I think

42
00:02:21,800 --> 00:02:25,600
Speaker 1: the market is expecting FAT to kind of high conserventy

43
00:02:25,680 --> 00:02:27,960
Speaker 1: five basis points next week and then maybe even more

44
00:02:28,000 --> 00:02:30,560
Speaker 1: than that UM. So I think this is going to

45
00:02:30,639 --> 00:02:33,880
Speaker 1: be the theme over the next UM. I think through

46
00:02:34,360 --> 00:02:38,240
Speaker 1: two even to three UM that will weigh on the

47
00:02:38,280 --> 00:02:42,080
Speaker 1: market sentiment. So we have been seeing buyers protesting against

48
00:02:42,120 --> 00:02:45,760
Speaker 1: paying mortgages on these uncompleted homes in China, and that

49
00:02:45,800 --> 00:02:49,080
Speaker 1: poses a risk for policymakers who are trying to reign

50
00:02:49,120 --> 00:02:51,880
Speaker 1: in developers debt and also keep the real estate sector going.

51
00:02:52,200 --> 00:02:54,400
Speaker 1: Where do you see I guess value or do you

52
00:02:54,440 --> 00:02:57,280
Speaker 1: see value at all in the property sector in China.

53
00:02:57,720 --> 00:03:01,560
Speaker 1: We are closely monitoring the tuation there UM. But I

54
00:03:01,600 --> 00:03:06,000
Speaker 1: think right now we are actually fairly constructive on Chinese

55
00:03:06,120 --> 00:03:09,280
Speaker 1: equities in journal UM, and that is because we think

56
00:03:09,320 --> 00:03:13,840
Speaker 1: that China is actually relatively positioned under the current macro environment,

57
00:03:14,560 --> 00:03:19,040
Speaker 1: given the more favorable UM policy outlook and also economic

58
00:03:19,480 --> 00:03:22,920
Speaker 1: kind of potential trend there. So we're actually turning fairly

59
00:03:22,919 --> 00:03:27,000
Speaker 1: constructive on Chinese equities in general. So a positive policy

60
00:03:27,080 --> 00:03:30,280
Speaker 1: outlook is is a complicated thing to explain that we

61
00:03:30,320 --> 00:03:32,440
Speaker 1: had this news on on d D at least as

62
00:03:32,480 --> 00:03:35,240
Speaker 1: relaid by the Wall Street Journal, that the probe appears

63
00:03:35,280 --> 00:03:37,960
Speaker 1: to be ending. There's a big fine, a billion dollar fine.

64
00:03:38,520 --> 00:03:40,760
Speaker 1: But if I think for more than a year, people

65
00:03:40,800 --> 00:03:43,280
Speaker 1: have been sort of musing, you know, when will the

66
00:03:43,360 --> 00:03:47,360
Speaker 1: crackdown ease or when will it end? Uh, it's a

67
00:03:47,400 --> 00:03:51,640
Speaker 1: long process. It there may not be an inflection point. UM.

68
00:03:51,800 --> 00:03:54,920
Speaker 1: So where are we in that process? I think when

69
00:03:54,960 --> 00:03:58,440
Speaker 1: we talked about policies, we're looking at policies in journal. UM.

70
00:03:58,480 --> 00:04:01,839
Speaker 1: You know, we have seen at UM there's been kind

71
00:04:01,840 --> 00:04:05,160
Speaker 1: of measured to ease the policies in journal to support

72
00:04:05,160 --> 00:04:07,800
Speaker 1: the market and also the economy. And if you look

73
00:04:07,840 --> 00:04:10,600
Speaker 1: at the magnitude of the policy easing right now, it

74
00:04:10,760 --> 00:04:13,320
Speaker 1: is kind of the modest compared to the last round

75
00:04:13,320 --> 00:04:16,360
Speaker 1: of easing. But UM easing has been kind of rendered

76
00:04:16,480 --> 00:04:21,400
Speaker 1: up across physical monitoring and also property sector actually UM,

77
00:04:21,480 --> 00:04:25,200
Speaker 1: so we are UM and also quite closely monitoring kind

78
00:04:25,200 --> 00:04:28,799
Speaker 1: of the UM restrictions on COVID, which is also gradually

79
00:04:28,800 --> 00:04:31,839
Speaker 1: easy enough. So all of these is actually pointing UM

80
00:04:31,839 --> 00:04:35,640
Speaker 1: to a kind of relatively more positive outlook compared to before.

81
00:04:36,320 --> 00:04:38,880
Speaker 1: What about though, if we do see further lockdowns or

82
00:04:38,880 --> 00:04:41,120
Speaker 1: do you think we're sort of passed that point in

83
00:04:41,200 --> 00:04:44,120
Speaker 1: terms of being very very strict on COVID zero in

84
00:04:44,200 --> 00:04:46,600
Speaker 1: terms of maybe things turning a little bit better as

85
00:04:46,600 --> 00:04:52,719
Speaker 1: we head into it is actually quite um positive to

86
00:04:52,880 --> 00:04:56,600
Speaker 1: see that um some of the local governments are applying

87
00:04:57,160 --> 00:05:00,840
Speaker 1: UM kind of shorter and also targeted quarantin things. And

88
00:05:00,920 --> 00:05:04,920
Speaker 1: if you look at COVID related kind of interest city traveling,

89
00:05:05,240 --> 00:05:08,560
Speaker 1: that is also kind of UM seeing kind of restriction

90
00:05:08,600 --> 00:05:12,800
Speaker 1: being easy enough. UM. So this environment actually providing a

91
00:05:12,839 --> 00:05:17,640
Speaker 1: positive kind of support to recoveries boast in terms of production,

92
00:05:17,680 --> 00:05:20,680
Speaker 1: but also more important in terms of supply chains. So

93
00:05:20,760 --> 00:05:24,360
Speaker 1: I think we are on the kind of an improving trend,

94
00:05:24,760 --> 00:05:27,440
Speaker 1: and again we're closely monitoring. I think if you look

95
00:05:27,480 --> 00:05:30,600
Speaker 1: at the number of cases right now, even though there

96
00:05:30,760 --> 00:05:34,000
Speaker 1: is some kind of UM increase in some of the

97
00:05:34,080 --> 00:05:38,200
Speaker 1: local UM places, but in general, I think the overall

98
00:05:38,320 --> 00:05:41,560
Speaker 1: number is way below the peak in April. So it's

99
00:05:41,560 --> 00:05:44,120
Speaker 1: a process like we talked about earlier, and it's a

100
00:05:44,120 --> 00:05:47,960
Speaker 1: slow process. UM. So back to the question that I teased,

101
00:05:48,040 --> 00:05:52,839
Speaker 1: which is on the global inflation problem, what's the best

102
00:05:52,839 --> 00:05:55,120
Speaker 1: thing to watch to to try to get a handle

103
00:05:55,160 --> 00:05:57,360
Speaker 1: get out in front of the FED, because it might

104
00:05:57,400 --> 00:05:59,520
Speaker 1: be too late if if you're waiting for some sort

105
00:05:59,520 --> 00:06:01,520
Speaker 1: of sign that you know, two or three prints in

106
00:06:01,560 --> 00:06:03,680
Speaker 1: a row the inflation is down. That will be too late,

107
00:06:03,720 --> 00:06:06,040
Speaker 1: the market will have moved. What are the early signs?

108
00:06:07,080 --> 00:06:10,600
Speaker 1: We actually think that the inflation will be around and

109
00:06:10,720 --> 00:06:13,960
Speaker 1: will be sticky for some time. UM I think UM,

110
00:06:14,160 --> 00:06:16,599
Speaker 1: UM you know, if we look at kind of the

111
00:06:16,680 --> 00:06:19,839
Speaker 1: latest number coming out from last week, UM, you know

112
00:06:19,880 --> 00:06:23,919
Speaker 1: there is a broadening base for inflation, and therefore, UM

113
00:06:23,960 --> 00:06:27,720
Speaker 1: we have the view that UM US inflation will stay

114
00:06:27,920 --> 00:06:31,520
Speaker 1: above the FETs target two UM throughout this year, but

115
00:06:31,640 --> 00:06:35,280
Speaker 1: also across next year. UM we will only see number

116
00:06:35,480 --> 00:06:39,360
Speaker 1: kind of modestly UM kind of uh tooting down this

117
00:06:39,440 --> 00:06:43,240
Speaker 1: year before the TIDER policy actually makes the impact next year.

118
00:06:43,760 --> 00:06:46,440
Speaker 1: How long does that dollar strength last? And how if

119
00:06:46,480 --> 00:06:48,680
Speaker 1: it does last for a long time, how worrying is

120
00:06:48,720 --> 00:06:52,800
Speaker 1: that for investors in Asia? We are of the view

121
00:06:52,880 --> 00:06:58,360
Speaker 1: that dollar will remain strong on a broad baskets basis. UM.

122
00:06:58,400 --> 00:07:00,359
Speaker 1: You know, there are a number of UM kind of

123
00:07:00,440 --> 00:07:03,520
Speaker 1: reasons that that supports dollar strengths. UM in the in

124
00:07:03,560 --> 00:07:06,919
Speaker 1: the environment where there is elevated inflation, tide, the financial

125
00:07:06,960 --> 00:07:10,760
Speaker 1: conditions and also a flight UM kind of two UM

126
00:07:10,840 --> 00:07:13,960
Speaker 1: quality assets. All of these are supportive to dollar and

127
00:07:14,000 --> 00:07:16,240
Speaker 1: If you look at the other d M currencies, there

128
00:07:16,240 --> 00:07:19,920
Speaker 1: are you know, individual issues facing those currencies. You know,

129
00:07:20,000 --> 00:07:25,400
Speaker 1: there's UM European UM energy supply uncertainties, there's UK politics,

130
00:07:25,440 --> 00:07:28,440
Speaker 1: and even bo j is you know, quite keen to

131
00:07:28,560 --> 00:07:32,920
Speaker 1: keep bought US close to zero. So again I think UM,

132
00:07:32,960 --> 00:07:35,720
Speaker 1: you know, our view is that US, the US dollar

133
00:07:35,880 --> 00:07:40,200
Speaker 1: against these major currencies will maintain pretty kind of strong.

134
00:07:40,840 --> 00:07:42,880
Speaker 1: Jin thanks for coming in your first time, great Joe,

135
00:07:42,960 --> 00:07:46,320
Speaker 1: Thank you very much. Jin J Investment specialist multi aslets.

136
00:07:46,320 --> 00:07:49,080
Speaker 1: There's solutions at JP Morgan Asset Management with US in

137
00:07:49,120 --> 00:07:49,520
Speaker 1: Hong Kong,