WEBVTT - Vicki Chi on the Markets (Audio)

0:00:00.080 --> 0:00:02.520
<v Speaker 1>Let's get to our guests now. Vicki is portfolio manager

0:00:02.520 --> 0:00:05.160
<v Speaker 1>of Asian Equities at Rebecca, joining us from Hong Kong.

0:00:05.480 --> 0:00:07.880
<v Speaker 1>Before we get to your views on broader Asia, I

0:00:07.920 --> 0:00:10.920
<v Speaker 1>just wanted to get your macro viewpoint to Vicky, because

0:00:10.920 --> 0:00:13.320
<v Speaker 1>we have this weak US economic data that's pulled the

0:00:13.360 --> 0:00:15.600
<v Speaker 1>dollar a little lower bond where is giving a bit

0:00:15.640 --> 0:00:18.119
<v Speaker 1>of a reason to pause, But we've still got the

0:00:18.160 --> 0:00:21.279
<v Speaker 1>market very much pricing in higher long term rates. How

0:00:21.280 --> 0:00:23.560
<v Speaker 1>hawkish do you expect the FED to be at Jackson Hall?

0:00:25.720 --> 0:00:28.640
<v Speaker 1>Good morning, Very glad to be here. I'm not an

0:00:28.680 --> 0:00:31.319
<v Speaker 1>expert on the US rates, but if I take a

0:00:31.440 --> 0:00:35.040
<v Speaker 1>slightly longer term view, I actually do think that inflation

0:00:35.440 --> 0:00:38.479
<v Speaker 1>should not be overlooked, given the fact that wages are

0:00:38.520 --> 0:00:41.239
<v Speaker 1>probably still going to grow, and given that we're in

0:00:41.400 --> 0:00:45.400
<v Speaker 1>energy transition globally, I do believe that there's probably a

0:00:45.479 --> 0:00:47.640
<v Speaker 1>longer term that we have to go in terms of

0:00:47.680 --> 0:00:50.400
<v Speaker 1>work interest rates will be and that would be very

0:00:50.440 --> 0:00:53.200
<v Speaker 1>different compared to what we're used you know, what we're

0:00:53.280 --> 0:00:55.960
<v Speaker 1>used to over the past ten years. So I do

0:00:56.160 --> 0:00:59.360
<v Speaker 1>think that from a little bit longer term perspective, we

0:00:59.400 --> 0:01:03.360
<v Speaker 1>should be um preparing for maybe a longer term normalization

0:01:03.400 --> 0:01:06.320
<v Speaker 1>of prices and interest rates, all right, but their movement

0:01:06.440 --> 0:01:08.840
<v Speaker 1>in rates and in the dollar very much plays into

0:01:08.920 --> 0:01:11.800
<v Speaker 1>what we see across Asia as well. If we see

0:01:11.840 --> 0:01:15.120
<v Speaker 1>an extension of dollar strength in the weeks ahead, what

0:01:15.280 --> 0:01:16.920
<v Speaker 1>kind of outlook does that or how does that kind

0:01:16.920 --> 0:01:21.039
<v Speaker 1>of change your outlook for Asian equities? Right So, in

0:01:21.120 --> 0:01:24.280
<v Speaker 1>the past, obviously there has been certain vulnerabilities within the

0:01:24.319 --> 0:01:28.080
<v Speaker 1>Asian economies when it comes to dollar fluctuations. But if

0:01:28.120 --> 0:01:30.640
<v Speaker 1>we look at right now, what's happening is actually that

0:01:30.920 --> 0:01:35.680
<v Speaker 1>several markets in Asia is becoming structurally better positioned against

0:01:35.680 --> 0:01:39.600
<v Speaker 1>developed economies. Actually, so we're talking about, for example, in

0:01:39.720 --> 0:01:43.199
<v Speaker 1>Nesia in Southeast Asia is um now running a current

0:01:43.280 --> 0:01:47.240
<v Speaker 1>count surplus, very different picture compared to let's say around

0:01:47.280 --> 0:01:50.400
<v Speaker 1>the DFC time or even the Asian Financial crisis times.

0:01:50.440 --> 0:01:54.280
<v Speaker 1>So I think some structural elements are really at play

0:01:54.320 --> 0:01:57.240
<v Speaker 1>for several key Asian markets, and I think we should

0:01:57.280 --> 0:02:00.559
<v Speaker 1>not lose sight of that um from even the short

0:02:00.640 --> 0:02:04.040
<v Speaker 1>term dollar fluctuations. And what markets are you looking at

0:02:04.160 --> 0:02:07.400
<v Speaker 1>is potentially being I guess isolated or buffered from a

0:02:07.440 --> 0:02:12.960
<v Speaker 1>potential global recession. Asia definitely have several of those markets

0:02:12.960 --> 0:02:15.160
<v Speaker 1>in India is a big one, and the Philippines actually

0:02:15.200 --> 0:02:18.440
<v Speaker 1>in a way is also largely isolated. So a lot

0:02:18.480 --> 0:02:22.239
<v Speaker 1>of these countries actually they have their very strong domestic story.

0:02:22.600 --> 0:02:27.640
<v Speaker 1>They have the economies are less um um integrated into

0:02:27.680 --> 0:02:32.160
<v Speaker 1>the global economy. So when there's a global recession, these

0:02:32.200 --> 0:02:36.440
<v Speaker 1>markets very likely will do better when we look at

0:02:36.480 --> 0:02:39.440
<v Speaker 1>the reopening trade too. It's very interesting you say the

0:02:39.520 --> 0:02:42.000
<v Speaker 1>likes of the Philippines is one that could be isolated

0:02:42.000 --> 0:02:45.360
<v Speaker 1>from global recession. We've seen a massive pickup in Southeast

0:02:45.360 --> 0:02:47.600
<v Speaker 1>Asia tourism as well, helping the likes of the bar

0:02:47.760 --> 0:02:51.360
<v Speaker 1>the tie economy. These markets that you also see some

0:02:51.480 --> 0:02:58.519
<v Speaker 1>optimism for UM on a relative basis. I prefer Indonesia

0:02:58.560 --> 0:03:01.960
<v Speaker 1>and the Philippines of or India and Thailand, and that

0:03:02.200 --> 0:03:05.880
<v Speaker 1>is largely due to fundamental reasons where I find my

0:03:05.919 --> 0:03:11.240
<v Speaker 1>stock ideas, but also largely due to um the valuation

0:03:11.320 --> 0:03:14.040
<v Speaker 1>of different countries and stocks that are trading there. We

0:03:14.080 --> 0:03:16.000
<v Speaker 1>spake to one of your colleagues earlier in the week

0:03:16.080 --> 0:03:19.600
<v Speaker 1>talking about the LPR cuts, the MLF cuts and how

0:03:19.720 --> 0:03:22.920
<v Speaker 1>much further we can really see stimulation in the Chinese

0:03:23.000 --> 0:03:27.000
<v Speaker 1>economy if we are not kind of seeing this COVID

0:03:27.200 --> 0:03:31.240
<v Speaker 1>zero policy completely being wiped out and giving this chance

0:03:31.320 --> 0:03:33.320
<v Speaker 1>for the economy to recover. How do you kind of

0:03:33.400 --> 0:03:39.240
<v Speaker 1>view investing in Chinese equities when there's still so many headwinds? Right,

0:03:39.480 --> 0:03:43.280
<v Speaker 1>the Chinese equity market has been extremely volatile, and it's

0:03:43.520 --> 0:03:47.520
<v Speaker 1>very driven by the policy change day to day, and

0:03:47.560 --> 0:03:50.440
<v Speaker 1>I think it's really helpful to keep a slightly longer

0:03:50.600 --> 0:03:53.280
<v Speaker 1>term reveal here where the policy is going. And I

0:03:53.320 --> 0:03:57.280
<v Speaker 1>think we're unlikely to get one very clear signal from

0:03:57.280 --> 0:03:59.640
<v Speaker 1>one day to another that we're accessing. I think is

0:03:59.680 --> 0:04:03.480
<v Speaker 1>more likely that it will go slowly and steadily out

0:04:03.520 --> 0:04:07.720
<v Speaker 1>of this zero COVID policy into a normalization. So from

0:04:07.760 --> 0:04:12.480
<v Speaker 1>that perspective, I think people very focused. Being very focused

0:04:12.520 --> 0:04:15.120
<v Speaker 1>short term and not taking a long term picture means

0:04:15.200 --> 0:04:18.080
<v Speaker 1>that people don't see we still have one of the

0:04:18.160 --> 0:04:22.239
<v Speaker 1>largest reopening stories coming up in Asia globally as well,

0:04:22.520 --> 0:04:26.719
<v Speaker 1>so knowing what happened after reopening has happened globally coming

0:04:26.760 --> 0:04:29.440
<v Speaker 1>back to this market, I think that's the most exciting

0:04:29.480 --> 0:04:32.000
<v Speaker 1>part of Chinese aquities. If you take let's say one

0:04:32.120 --> 0:04:34.680
<v Speaker 1>of you and when do we see a bottoming of

0:04:34.720 --> 0:04:36.880
<v Speaker 1>the property market. I mean, we saw earlier this week

0:04:36.920 --> 0:04:39.560
<v Speaker 1>as well China, as I mentioned, cutting those borrowing costs

0:04:39.600 --> 0:04:42.480
<v Speaker 1>but also planning these special developer loans worth as much

0:04:42.480 --> 0:04:44.880
<v Speaker 1>as twenty nine point three billion dollars. If you look

0:04:44.920 --> 0:04:47.839
<v Speaker 1>at market action this week, it didn't really move the

0:04:47.880 --> 0:04:50.200
<v Speaker 1>needle that much. But when do we see I guess

0:04:50.480 --> 0:04:55.159
<v Speaker 1>an upturn coming through in this battered property market, right,

0:04:55.240 --> 0:04:57.960
<v Speaker 1>So I think when it comes to property policy, I

0:04:57.960 --> 0:05:01.760
<v Speaker 1>think one thing is very clear that the the central

0:05:01.800 --> 0:05:06.120
<v Speaker 1>government obviously takes the view of warehousing market should be

0:05:06.360 --> 0:05:09.640
<v Speaker 1>within the whole economy. So from that perspective, I do

0:05:09.720 --> 0:05:14.040
<v Speaker 1>not expect an outright UH stimulus. But then I also

0:05:14.120 --> 0:05:18.880
<v Speaker 1>do see that they expect um to support this market

0:05:19.200 --> 0:05:23.120
<v Speaker 1>to prevent prices from keep stropping. So from that perspective,

0:05:23.240 --> 0:05:26.720
<v Speaker 1>I do believe that we will see and the bottoming

0:05:26.800 --> 0:05:30.159
<v Speaker 1>of the property market gradually. But having said that, I

0:05:30.200 --> 0:05:33.240
<v Speaker 1>am still concerned about all these debts that's been linked

0:05:33.440 --> 0:05:38.040
<v Speaker 1>to property developers that's that's already out of operations. So

0:05:38.120 --> 0:05:40.440
<v Speaker 1>a lot of these debts needs take needs to take

0:05:40.480 --> 0:05:43.240
<v Speaker 1>time to be digested by the market over time, but

0:05:43.320 --> 0:05:47.080
<v Speaker 1>the survivors will actually probably face a much better future

0:05:47.320 --> 0:05:49.920
<v Speaker 1>also given where the share prices are um, there are

0:05:50.200 --> 0:05:53.120
<v Speaker 1>very very cheap stocks out there, So from that perspective,

0:05:53.200 --> 0:05:56.520
<v Speaker 1>I think there is opportunity within this sector. And let's

0:05:56.560 --> 0:05:58.640
<v Speaker 1>talk about Hong Kong. I mean, yesterday we had that

0:05:58.760 --> 0:06:01.520
<v Speaker 1>report that quarantine could be eased for a business summer

0:06:01.520 --> 0:06:04.720
<v Speaker 1>in November. Didn't either move stocks either, and and one

0:06:04.720 --> 0:06:06.760
<v Speaker 1>of our analysts put it that, you know, traders don't

0:06:06.760 --> 0:06:09.040
<v Speaker 1>really want to buy into the reopening rally into Hong

0:06:09.080 --> 0:06:13.000
<v Speaker 1>Kong until they're confident that quarantine is completely going away.

0:06:13.240 --> 0:06:15.520
<v Speaker 1>What's your view on on investing in Hong Kong at

0:06:15.520 --> 0:06:20.320
<v Speaker 1>the moment. I do think that it's very hard to

0:06:20.360 --> 0:06:24.000
<v Speaker 1>say short term whether there is policy and certainty in

0:06:24.080 --> 0:06:26.880
<v Speaker 1>terms of opening up. But I think again the trend

0:06:27.200 --> 0:06:30.320
<v Speaker 1>is very clear, So from that perspective for Hong Kong,

0:06:30.560 --> 0:06:33.320
<v Speaker 1>it is also a matter of time before the society

0:06:33.400 --> 0:06:37.080
<v Speaker 1>fully reopens. I guess it's hard to living here. Is

0:06:37.120 --> 0:06:40.159
<v Speaker 1>hard to imagine that it happens immediately, but I think

0:06:40.360 --> 0:06:43.920
<v Speaker 1>steadily and slowly it is coming out of this um

0:06:43.960 --> 0:06:46.960
<v Speaker 1>of of this this this situation and back to normalization

0:06:47.400 --> 0:06:49.840
<v Speaker 1>and kase. Just a final quick question on sustainability of

0:06:49.880 --> 0:06:54.800
<v Speaker 1>saying this is an exciting long term trend. Absolutely, we

0:06:54.880 --> 0:06:59.839
<v Speaker 1>are very excited about investing in sustainable sustainability leaders and

0:07:00.200 --> 0:07:03.400
<v Speaker 1>enablers in Asia. We believe that most of the global

0:07:03.440 --> 0:07:07.280
<v Speaker 1>funds that are focused on sustainability actually overlook our region

0:07:07.760 --> 0:07:12.320
<v Speaker 1>as a very important part of sustainable development globally, so

0:07:12.400 --> 0:07:15.640
<v Speaker 1>we've we look for companies that are benefiting from energy

0:07:15.680 --> 0:07:19.040
<v Speaker 1>transition and lifestyle change in the region, and a lot

0:07:19.080 --> 0:07:22.320
<v Speaker 1>of these docks are, like I mentioned, ignored by the

0:07:22.360 --> 0:07:25.280
<v Speaker 1>market and are actually offering great long term value for

0:07:25.320 --> 0:07:29.239
<v Speaker 1>investors and alpha. Vicky, thanks for coming on. Vikichi puort Folio,

0:07:29.240 --> 0:07:31.560
<v Speaker 1>a manager of Asian equities at Rebecca, joining us from

0:07:31.640 --> 0:07:33.600
<v Speaker 1>Hong Kong here on Bloomberg Daybreak Asia