WEBVTT - Daniel Lam on the Markets

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<v Speaker 1>Let's get to our guest. Daniel Lamb is with us.

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<v Speaker 1>Daniel is head of Equity Strategy, It's Standard chartered Wealth Management.

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<v Speaker 1>He joins us from our studios in Hong Kong. Daniel,

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<v Speaker 1>thanks for being with us. I think we have to

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<v Speaker 1>begin with the pm I data for the month of November.

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<v Speaker 1>Both sentiments from the government in China, uh show us

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<v Speaker 1>further in contraction. This really shouldn't come as a surprise, right,

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<v Speaker 1>We've seen very stringent COVID restrictions and curtailed domestic demand.

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<v Speaker 1>Where do we go from here? Do you think? Oh,

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<v Speaker 1>it shouldn't be a surprise at all because of the

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<v Speaker 1>COVID situation in China. Um, But investors they have been

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<v Speaker 1>looking ahead. I mean in November, for example, the Hansling

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<v Speaker 1>index was up, you know, nearly four thousand points from

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<v Speaker 1>the bottom of October. So investors are still expressing the

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<v Speaker 1>view that further reopening it's going to continue in China,

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<v Speaker 1>It's going to happen. But in the Niata there's going

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<v Speaker 1>to be a lot of volativity, isn't there. What's your

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<v Speaker 1>temptation to look for wagons or to sit on the sidelines.

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<v Speaker 1>Oh no, I think UM investors should be looking for

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<v Speaker 1>levels to enter because you know, the reopening direction is

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<v Speaker 1>quite clear for the next six to twelve months. UM.

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<v Speaker 1>If you look at the latest pull back back on

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<v Speaker 1>Monday morning, it went all the way down to about

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<v Speaker 1>sixteen thousand, eight hundred and Handstand Index, which is you know,

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<v Speaker 1>if you look at the range of the movement um

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<v Speaker 1>that fourteen th six hundred to eighteen four andre that's

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<v Speaker 1>exactly six full bnaturi tradesmen, and then it met with

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<v Speaker 1>very heavy volume buying. UM. If you notice that the

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<v Speaker 1>Handstand Index has been going up on strong volume, but

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<v Speaker 1>when they have days of pull back, the volume has

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<v Speaker 1>been relatively small. That shows that investors are still net

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<v Speaker 1>buying Hong Kong China equities and they're looking by the dip.

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<v Speaker 1>So I would think that in the Hanks in the

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<v Speaker 1>case of Hanks and Index, if it pulls back to

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<v Speaker 1>say around the seventeen thousand level, it should be quite

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<v Speaker 1>a strong by from there. Do we know that who

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<v Speaker 1>is buying? I mean, is it primarily institutions versus retail

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<v Speaker 1>at this point? And is there durability in this trend?

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<v Speaker 1>I mean, I'm thinking this could be kind of a

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<v Speaker 1>you know, a bear market trap. Well, that the different

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<v Speaker 1>ways of looking at this, but um, if you look

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<v Speaker 1>at the policy direction, it's been on the positive side,

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<v Speaker 1>right reopening and also the property backstop. Um. If you

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<v Speaker 1>look at the US dollar has been weakening and that's

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<v Speaker 1>helping em and Chinese equities. So there is potentially more

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<v Speaker 1>links going on for this, and I'm expecting that the

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<v Speaker 1>index could go above nineteen thou by the year end.

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<v Speaker 1>In terms of who is buying, I think is you

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<v Speaker 1>know across the board, is institutions and also the retails

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<v Speaker 1>also coming in. And is much of that demand coming

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<v Speaker 1>from off shore or do you see it from coming

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<v Speaker 1>from within China? Well, um both, I think yes, on

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<v Speaker 1>shore and off shore. When you look at some of

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<v Speaker 1>the other economies in the Asia Pacific that rely on

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<v Speaker 1>the growth story in China, I'm thinking of Taiwan, I'm

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<v Speaker 1>thinking of South Korea in particular. Are you as positive

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<v Speaker 1>on those markets? Well, I think that's um. The first

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<v Speaker 1>you know direct benefit um from the potential you know

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<v Speaker 1>further reopening, it is going to be the Chinese equities. UM,

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<v Speaker 1>So that would be the market that will be focusing

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<v Speaker 1>upon in Asia X Japan, Daniel, I want to get

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<v Speaker 1>your thoughts on the growth outlook for China. We've got

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<v Speaker 1>the i m F warning that it might be trimming

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<v Speaker 1>its forecast down to three point two percent this year

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<v Speaker 1>four point four percent in the next. The risks are

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<v Speaker 1>on the downside, causing to the I m F. What's

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<v Speaker 1>your outlook and more support measures do you see coming

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<v Speaker 1>from policy markers? I believe that the key is still

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<v Speaker 1>the speed of the reopening UM. Once that reopening continues

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<v Speaker 1>and hopefully may acceaglerate UM, then the growth can likely

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<v Speaker 1>pick up. I mean it's going to improve first of all,

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<v Speaker 1>the ease of movement mobility and also improve the I

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<v Speaker 1>guess some amend the supply chain disruption that it's been causing.

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<v Speaker 1>Do you suspect that that consumer confidence or at least

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<v Speaker 1>sentiment among the retail person in China is going to

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<v Speaker 1>pivot that quickly after everything people have been through for

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<v Speaker 1>the last three years, it's going to improve. UM. But I,

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<v Speaker 1>like I said in the first part of the show, UM,

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<v Speaker 1>the markets the investors are looking beyond these UM. If

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<v Speaker 1>they see for the measures of reopening, then I think

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<v Speaker 1>the markets would take it quite favorably. I think the

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<v Speaker 1>market is going to run ahead of the of the

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<v Speaker 1>improvement in growth. We've also seence a number of support

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<v Speaker 1>measures unveiled for the property sector. UM. That sector has

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<v Speaker 1>a lot of problems. I'm not going to unpack them now.

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<v Speaker 1>But do you think we've seen the worst of it? Though?

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<v Speaker 1>And I feel like I asked that question every time? Well,

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<v Speaker 1>I believe that this time is for real. There's a

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<v Speaker 1>very strong backstop that the government has put forward with

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<v Speaker 1>the sixteen point Plan. UM. They're all designed to improve

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<v Speaker 1>the timely delivery of the new flats and also allow

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<v Speaker 1>the property developers to manage the finance and introduce new

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<v Speaker 1>strategic investors via yesterday's announcement of equity refinancing. So if

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<v Speaker 1>you look at the how your bonds, they have rebounded

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<v Speaker 1>very strongly, a lot of distress, name have doubled from

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<v Speaker 1>the bottom over the past a few weeks, and similarly

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<v Speaker 1>for the property stocks in China as well. UM. But

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<v Speaker 1>having said that, UM, the government has made it very

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<v Speaker 1>clear that properties are made for living and not for speculation.

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<v Speaker 1>So basically you have a situation where the downside appears

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<v Speaker 1>to be much more limited than before. But what about

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<v Speaker 1>the upside? The upside is probably going to be I

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<v Speaker 1>guess limited as well for the for the longer term, right,

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<v Speaker 1>because the earnings, you know, they can stabilize, but they're

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<v Speaker 1>not going to improve drastically. I mean, like we said that,

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<v Speaker 1>you know, growth is still relatively um slow by Chinese standard,

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<v Speaker 1>and that would feed through to property demount. You seem

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<v Speaker 1>pretty positive, and I'm wondering if there's anything that concerns

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<v Speaker 1>you right now. I mean you feel like maybe the

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<v Speaker 1>markets and the economy are on the verge. Well, you

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<v Speaker 1>said that the markets are out in front of the

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<v Speaker 1>turn in the economy, but the worst seems to be behind.

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<v Speaker 1>Is where China and is concerned. Well, that depends on

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<v Speaker 1>the point of view, right, because the markets have been

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<v Speaker 1>the biggest underperforming major market globally until October, So we're

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<v Speaker 1>really starting from a very low base. And the number

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<v Speaker 1>of low hanging fruits in China, I believe it's much

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<v Speaker 1>more than the rest of the world, like the US

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<v Speaker 1>for example. Yes, um, you know, the inflation number has

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<v Speaker 1>been coming off, but there's still fat rate heights ahead.

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<v Speaker 1>But in terms of China, they have room to ease,

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<v Speaker 1>so right to be speaking, they can outperform the US alright,

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<v Speaker 1>Daniel Lamb on that night, we will have to leave it,

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<v Speaker 1>but thank you so much for joining us on Bloomberg Daybreak.

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<v Speaker 1>Asia very optimistic, Daniel Lamb, their head of equity strategy

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<v Speaker 1>at Standard Charted Wealth and Management,