Speaker 1: Let's get to our guest. Daniel Lamb is with us.
Speaker 1: Daniel is head of Equity Strategy, It's Standard chartered Wealth Management.
Speaker 1: He joins us from our studios in Hong Kong. Daniel,
Speaker 1: thanks for being with us. I think we have to
Speaker 1: begin with the pm I data for the month of November.
Speaker 1: Both sentiments from the government in China, uh show us
Speaker 1: further in contraction. This really shouldn't come as a surprise, right,
Speaker 1: We've seen very stringent COVID restrictions and curtailed domestic demand.
Speaker 1: Where do we go from here? Do you think? Oh,
Speaker 1: it shouldn't be a surprise at all because of the
Speaker 1: COVID situation in China. Um, But investors they have been
Speaker 1: looking ahead. I mean in November, for example, the Hansling
Speaker 1: index was up, you know, nearly four thousand points from
Speaker 1: the bottom of October. So investors are still expressing the
Speaker 1: view that further reopening it's going to continue in China,
Speaker 1: It's going to happen. But in the Niata there's going
Speaker 1: to be a lot of volativity, isn't there. What's your
Speaker 1: temptation to look for wagons or to sit on the sidelines.
Speaker 1: Oh no, I think UM investors should be looking for
Speaker 1: levels to enter because you know, the reopening direction is
Speaker 1: quite clear for the next six to twelve months. UM.
Speaker 1: If you look at the latest pull back back on
Speaker 1: Monday morning, it went all the way down to about
Speaker 1: sixteen thousand, eight hundred and Handstand Index, which is you know,
Speaker 1: if you look at the range of the movement um
Speaker 1: that fourteen th six hundred to eighteen four andre that's
Speaker 1: exactly six full bnaturi tradesmen, and then it met with
Speaker 1: very heavy volume buying. UM. If you notice that the
Speaker 1: Handstand Index has been going up on strong volume, but
Speaker 1: when they have days of pull back, the volume has
Speaker 1: been relatively small. That shows that investors are still net
Speaker 1: buying Hong Kong China equities and they're looking by the dip.
Speaker 1: So I would think that in the Hanks in the
Speaker 1: case of Hanks and Index, if it pulls back to
Speaker 1: say around the seventeen thousand level, it should be quite
Speaker 1: a strong by from there. Do we know that who
Speaker 1: is buying? I mean, is it primarily institutions versus retail
Speaker 1: at this point? And is there durability in this trend?
Speaker 1: I mean, I'm thinking this could be kind of a
Speaker 1: you know, a bear market trap. Well, that the different
Speaker 1: ways of looking at this, but um, if you look
Speaker 1: at the policy direction, it's been on the positive side,
Speaker 1: right reopening and also the property backstop. Um. If you
Speaker 1: look at the US dollar has been weakening and that's
Speaker 1: helping em and Chinese equities. So there is potentially more
Speaker 1: links going on for this, and I'm expecting that the
Speaker 1: index could go above nineteen thou by the year end.
Speaker 1: In terms of who is buying, I think is you
Speaker 1: know across the board, is institutions and also the retails
Speaker 1: also coming in. And is much of that demand coming
Speaker 1: from off shore or do you see it from coming
Speaker 1: from within China? Well, um both, I think yes, on
Speaker 1: shore and off shore. When you look at some of
Speaker 1: the other economies in the Asia Pacific that rely on
Speaker 1: the growth story in China, I'm thinking of Taiwan, I'm
Speaker 1: thinking of South Korea in particular. Are you as positive
Speaker 1: on those markets? Well, I think that's um. The first
Speaker 1: you know direct benefit um from the potential you know
Speaker 1: further reopening, it is going to be the Chinese equities. UM,
Speaker 1: So that would be the market that will be focusing
Speaker 1: upon in Asia X Japan, Daniel, I want to get
Speaker 1: your thoughts on the growth outlook for China. We've got
Speaker 1: the i m F warning that it might be trimming
Speaker 1: its forecast down to three point two percent this year
Speaker 1: four point four percent in the next. The risks are
Speaker 1: on the downside, causing to the I m F. What's
Speaker 1: your outlook and more support measures do you see coming
Speaker 1: from policy markers? I believe that the key is still
Speaker 1: the speed of the reopening UM. Once that reopening continues
Speaker 1: and hopefully may acceaglerate UM, then the growth can likely
Speaker 1: pick up. I mean it's going to improve first of all,
Speaker 1: the ease of movement mobility and also improve the I
Speaker 1: guess some amend the supply chain disruption that it's been causing.
Speaker 1: Do you suspect that that consumer confidence or at least
Speaker 1: sentiment among the retail person in China is going to
Speaker 1: pivot that quickly after everything people have been through for
Speaker 1: the last three years, it's going to improve. UM. But I,
Speaker 1: like I said in the first part of the show, UM,
Speaker 1: the markets the investors are looking beyond these UM. If
Speaker 1: they see for the measures of reopening, then I think
Speaker 1: the markets would take it quite favorably. I think the
Speaker 1: market is going to run ahead of the of the
Speaker 1: improvement in growth. We've also seence a number of support
Speaker 1: measures unveiled for the property sector. UM. That sector has
Speaker 1: a lot of problems. I'm not going to unpack them now.
Speaker 1: But do you think we've seen the worst of it? Though?
Speaker 1: And I feel like I asked that question every time? Well,
Speaker 1: I believe that this time is for real. There's a
Speaker 1: very strong backstop that the government has put forward with
Speaker 1: the sixteen point Plan. UM. They're all designed to improve
Speaker 1: the timely delivery of the new flats and also allow
Speaker 1: the property developers to manage the finance and introduce new
Speaker 1: strategic investors via yesterday's announcement of equity refinancing. So if
Speaker 1: you look at the how your bonds, they have rebounded
Speaker 1: very strongly, a lot of distress, name have doubled from
Speaker 1: the bottom over the past a few weeks, and similarly
Speaker 1: for the property stocks in China as well. UM. But
Speaker 1: having said that, UM, the government has made it very
Speaker 1: clear that properties are made for living and not for speculation.
Speaker 1: So basically you have a situation where the downside appears
Speaker 1: to be much more limited than before. But what about
Speaker 1: the upside? The upside is probably going to be I
Speaker 1: guess limited as well for the for the longer term, right,
Speaker 1: because the earnings, you know, they can stabilize, but they're
Speaker 1: not going to improve drastically. I mean, like we said that,
Speaker 1: you know, growth is still relatively um slow by Chinese standard,
Speaker 1: and that would feed through to property demount. You seem
Speaker 1: pretty positive, and I'm wondering if there's anything that concerns
Speaker 1: you right now. I mean you feel like maybe the
Speaker 1: markets and the economy are on the verge. Well, you
Speaker 1: said that the markets are out in front of the
Speaker 1: turn in the economy, but the worst seems to be behind.
Speaker 1: Is where China and is concerned. Well, that depends on
Speaker 1: the point of view, right, because the markets have been
Speaker 1: the biggest underperforming major market globally until October, So we're
Speaker 1: really starting from a very low base. And the number
Speaker 1: of low hanging fruits in China, I believe it's much
Speaker 1: more than the rest of the world, like the US
Speaker 1: for example. Yes, um, you know, the inflation number has
Speaker 1: been coming off, but there's still fat rate heights ahead.
Speaker 1: But in terms of China, they have room to ease,
Speaker 1: so right to be speaking, they can outperform the US alright,
Speaker 1: Daniel Lamb on that night, we will have to leave it,
Speaker 1: but thank you so much for joining us on Bloomberg Daybreak.
Speaker 1: Asia very optimistic, Daniel Lamb, their head of equity strategy
Speaker 1: at Standard Charted Wealth and Management,