Speaker 1: Let's get to our guests now. Vicki is portfolio manager
Speaker 1: of Asian Equities at Rebecca, joining us from Hong Kong.
Speaker 1: Before we get to your views on broader Asia, I
Speaker 1: just wanted to get your macro viewpoint to Vicky, because
Speaker 1: we have this weak US economic data that's pulled the
Speaker 1: dollar a little lower bond where is giving a bit
Speaker 1: of a reason to pause, But we've still got the
Speaker 1: market very much pricing in higher long term rates. How
Speaker 1: hawkish do you expect the FED to be at Jackson Hall?
Speaker 1: Good morning, Very glad to be here. I'm not an
Speaker 1: expert on the US rates, but if I take a
Speaker 1: slightly longer term view, I actually do think that inflation
Speaker 1: should not be overlooked, given the fact that wages are
Speaker 1: probably still going to grow, and given that we're in
Speaker 1: energy transition globally, I do believe that there's probably a
Speaker 1: longer term that we have to go in terms of
Speaker 1: work interest rates will be and that would be very
Speaker 1: different compared to what we're used you know, what we're
Speaker 1: used to over the past ten years. So I do
Speaker 1: think that from a little bit longer term perspective, we
Speaker 1: should be um preparing for maybe a longer term normalization
Speaker 1: of prices and interest rates, all right, but their movement
Speaker 1: in rates and in the dollar very much plays into
Speaker 1: what we see across Asia as well. If we see
Speaker 1: an extension of dollar strength in the weeks ahead, what
Speaker 1: kind of outlook does that or how does that kind
Speaker 1: of change your outlook for Asian equities? Right So, in
Speaker 1: the past, obviously there has been certain vulnerabilities within the
Speaker 1: Asian economies when it comes to dollar fluctuations. But if
Speaker 1: we look at right now, what's happening is actually that
Speaker 1: several markets in Asia is becoming structurally better positioned against
Speaker 1: developed economies. Actually, so we're talking about, for example, in
Speaker 1: Nesia in Southeast Asia is um now running a current
Speaker 1: count surplus, very different picture compared to let's say around
Speaker 1: the DFC time or even the Asian Financial crisis times.
Speaker 1: So I think some structural elements are really at play
Speaker 1: for several key Asian markets, and I think we should
Speaker 1: not lose sight of that um from even the short
Speaker 1: term dollar fluctuations. And what markets are you looking at
Speaker 1: is potentially being I guess isolated or buffered from a
Speaker 1: potential global recession. Asia definitely have several of those markets
Speaker 1: in India is a big one, and the Philippines actually
Speaker 1: in a way is also largely isolated. So a lot
Speaker 1: of these countries actually they have their very strong domestic story.
Speaker 1: They have the economies are less um um integrated into
Speaker 1: the global economy. So when there's a global recession, these
Speaker 1: markets very likely will do better when we look at
Speaker 1: the reopening trade too. It's very interesting you say the
Speaker 1: likes of the Philippines is one that could be isolated
Speaker 1: from global recession. We've seen a massive pickup in Southeast
Speaker 1: Asia tourism as well, helping the likes of the bar
Speaker 1: the tie economy. These markets that you also see some
Speaker 1: optimism for UM on a relative basis. I prefer Indonesia
Speaker 1: and the Philippines of or India and Thailand, and that
Speaker 1: is largely due to fundamental reasons where I find my
Speaker 1: stock ideas, but also largely due to um the valuation
Speaker 1: of different countries and stocks that are trading there. We
Speaker 1: spake to one of your colleagues earlier in the week
Speaker 1: talking about the LPR cuts, the MLF cuts and how
Speaker 1: much further we can really see stimulation in the Chinese
Speaker 1: economy if we are not kind of seeing this COVID
Speaker 1: zero policy completely being wiped out and giving this chance
Speaker 1: for the economy to recover. How do you kind of
Speaker 1: view investing in Chinese equities when there's still so many headwinds? Right,
Speaker 1: the Chinese equity market has been extremely volatile, and it's
Speaker 1: very driven by the policy change day to day, and
Speaker 1: I think it's really helpful to keep a slightly longer
Speaker 1: term reveal here where the policy is going. And I
Speaker 1: think we're unlikely to get one very clear signal from
Speaker 1: one day to another that we're accessing. I think is
Speaker 1: more likely that it will go slowly and steadily out
Speaker 1: of this zero COVID policy into a normalization. So from
Speaker 1: that perspective, I think people very focused. Being very focused
Speaker 1: short term and not taking a long term picture means
Speaker 1: that people don't see we still have one of the
Speaker 1: largest reopening stories coming up in Asia globally as well,
Speaker 1: so knowing what happened after reopening has happened globally coming
Speaker 1: back to this market, I think that's the most exciting
Speaker 1: part of Chinese aquities. If you take let's say one
Speaker 1: of you and when do we see a bottoming of
Speaker 1: the property market. I mean, we saw earlier this week
Speaker 1: as well China, as I mentioned, cutting those borrowing costs
Speaker 1: but also planning these special developer loans worth as much
Speaker 1: as twenty nine point three billion dollars. If you look
Speaker 1: at market action this week, it didn't really move the
Speaker 1: needle that much. But when do we see I guess
Speaker 1: an upturn coming through in this battered property market, right,
Speaker 1: So I think when it comes to property policy, I
Speaker 1: think one thing is very clear that the the central
Speaker 1: government obviously takes the view of warehousing market should be
Speaker 1: within the whole economy. So from that perspective, I do
Speaker 1: not expect an outright UH stimulus. But then I also
Speaker 1: do see that they expect um to support this market
Speaker 1: to prevent prices from keep stropping. So from that perspective,
Speaker 1: I do believe that we will see and the bottoming
Speaker 1: of the property market gradually. But having said that, I
Speaker 1: am still concerned about all these debts that's been linked
Speaker 1: to property developers that's that's already out of operations. So
Speaker 1: a lot of these debts needs take needs to take
Speaker 1: time to be digested by the market over time, but
Speaker 1: the survivors will actually probably face a much better future
Speaker 1: also given where the share prices are um, there are
Speaker 1: very very cheap stocks out there, So from that perspective,
Speaker 1: I think there is opportunity within this sector. And let's
Speaker 1: talk about Hong Kong. I mean, yesterday we had that
Speaker 1: report that quarantine could be eased for a business summer
Speaker 1: in November. Didn't either move stocks either, and and one
Speaker 1: of our analysts put it that, you know, traders don't
Speaker 1: really want to buy into the reopening rally into Hong
Speaker 1: Kong until they're confident that quarantine is completely going away.
Speaker 1: What's your view on on investing in Hong Kong at
Speaker 1: the moment. I do think that it's very hard to
Speaker 1: say short term whether there is policy and certainty in
Speaker 1: terms of opening up. But I think again the trend
Speaker 1: is very clear, So from that perspective for Hong Kong,
Speaker 1: it is also a matter of time before the society
Speaker 1: fully reopens. I guess it's hard to living here. Is
Speaker 1: hard to imagine that it happens immediately, but I think
Speaker 1: steadily and slowly it is coming out of this um
Speaker 1: of of this this this situation and back to normalization
Speaker 1: and kase. Just a final quick question on sustainability of
Speaker 1: saying this is an exciting long term trend. Absolutely, we
Speaker 1: are very excited about investing in sustainable sustainability leaders and
Speaker 1: enablers in Asia. We believe that most of the global
Speaker 1: funds that are focused on sustainability actually overlook our region
Speaker 1: as a very important part of sustainable development globally, so
Speaker 1: we've we look for companies that are benefiting from energy
Speaker 1: transition and lifestyle change in the region, and a lot
Speaker 1: of these docks are, like I mentioned, ignored by the
Speaker 1: market and are actually offering great long term value for
Speaker 1: investors and alpha. Vicky, thanks for coming on. Vikichi puort Folio,
Speaker 1: a manager of Asian equities at Rebecca, joining us from
Speaker 1: Hong Kong here on Bloomberg Daybreak Asia