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Speaker 1: Let's get to our guest. Villam selves is with us,

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Speaker 1: Managing director and Global c i O at HSBC Global

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Speaker 1: Private Banking and Wealth. Joining from Singapore, Villain, thanks for

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Speaker 1: being with us. So much to unpack. When China, when

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Speaker 1: we consider the story there, the reopening, we know what

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Speaker 1: it's done to the healthcare situation, which is in and

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Speaker 1: of itself tragic. We had a lot of weakness in

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Speaker 1: crude oil today on the notion that we're going to

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Speaker 1: see a contraction in demand from China. But if you

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Speaker 1: look at some of the a d R s here

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Speaker 1: in New York, big rally following that rally in Hong Kong,

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Speaker 1: some of this was tied to the story on ant group.

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Speaker 1: Give me your your sense of where we are in

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Speaker 1: the China story as it relates to equity markets right now. Yeah,

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Speaker 1: we're certainly in the bullish camp. You know, we have

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Speaker 1: it overweights on meaning China. We haven't overweights on Hong

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Speaker 1: Kong and on the Asian region as well. And when

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Speaker 1: I travel here, I see a lot of activity, a

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Speaker 1: lot of optimism with the business owners that are often

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Speaker 1: our clients. They see a lot happening in terms of reopening.

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Speaker 1: They see a lot of happening in terms of supply

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Speaker 1: chain reorientation to Asian and frankly there's a lot of

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Speaker 1: innovation there as well. Clearly, the reopening in China is

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Speaker 1: not going to be a straight line. Um. You know,

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Speaker 1: it might speak earlier in the cities than in the

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Speaker 1: rest of the country, but there is a lot of

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Speaker 1: pent up demounds. Remember in the US and in Europe

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Speaker 1: when we finally reopened, a lot of penent uped amount

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Speaker 1: and you could see consumption growth in the order of

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Speaker 1: eight percent in China this year, which you know should

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Speaker 1: really need to that rebounds. It's it's more of a

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Speaker 1: question of when we will see that GDP accelerator rather

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Speaker 1: than you know and if in our view, So it

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Speaker 1: seems like the China trade right now is independent of

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Speaker 1: this other trade which has certainly the US and a

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Speaker 1: lot of other investors around the world and draw which

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Speaker 1: is the question the federal reserve and you know, how

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Speaker 1: long keep it keeps rate high and how harkership remains, etcetera.

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Speaker 1: Is that how you feel about China? And is it

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Speaker 1: a case now saying well, it's going to take a

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Speaker 1: while maybe to reap all the benefits, but you know,

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Speaker 1: pick your spots, even some of the ones that used

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Speaker 1: to be poison like property exactly. So it is, it

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Speaker 1: is somewhat decorrelated. I mean, obviously we live in a

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Speaker 1: global world and we're all you know, linked to some extent.

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Speaker 1: But today is the case I think that Europe and

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Speaker 1: the US are slowing down in China, se said, he

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Speaker 1: set up signs a very different outlook in terms of

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Speaker 1: GDP growth and in terms of earnings as well. Plus,

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Speaker 1: obviously China is still a very cheap market, um you know,

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Speaker 1: which for us there therefore it is and and overweight

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Speaker 1: where we go is um you know. That is also

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Speaker 1: in contrast with the US and in Europe, where consumer

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Speaker 1: discretionary is being hammered. In China, we actually go into

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Speaker 1: areas such as airlines, um, you know, leisure um, um

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Speaker 1: you know, and sort of the the online e commerce

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Speaker 1: because we think that we'll get a lift from um

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Speaker 1: you know that reopening and deceivings. Frankly that consumers they're

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Speaker 1: accumulated for many months as you want to use. So villam,

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Speaker 1: I'm concert kind of curious to the degree to which

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Speaker 1: your thesis on China is predicated on this idea. Yes,

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Speaker 1: we're reopening, but a lot more in the way of

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Speaker 1: government stimulus is required and Beijing will come through. And

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Speaker 1: that's just supports the story that we're talking about. Is

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Speaker 1: your thesis here contingent on more stimulus from the government.

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Speaker 1: It's mostly contingent on UM, you know, the commitment of

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Speaker 1: the government to stick to the reopening, and I do

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Speaker 1: think that UM, you know, the measures on the opening

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Speaker 1: as well as the measures on real estate UM you know,

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Speaker 1: signal much more of a balancing act between UM, you know,

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Speaker 1: growth and UM you know, managing those managing those issues. UM.

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Speaker 1: You know, whilst the zero policy COVID put put you know,

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Speaker 1: complete emphasis on you know, managing that UM, but you know,

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Speaker 1: accepting the negative growth consequences. Now it's much more of

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Speaker 1: that balancing act and therefore UM you know that you

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Speaker 1: know should continue to lead to UM UM you know,

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Speaker 1: when good support for for the economy. We do expect

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Speaker 1: some physical support and some monetary supports UM, but it's

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Speaker 1: really just sticking to that, to to that reopening, which

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Speaker 1: will do the trick. In our few as US stocks,

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Speaker 1: the big tech names, you know, Apple falling back below

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Speaker 1: the two trillion dollar cap. No. No one in that

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Speaker 1: two twillion dollar cap anymore, it's a headline. But nonetheless

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Speaker 1: this is there is a sense there's this pull away

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Speaker 1: from the you know, the five or six stocks that

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Speaker 1: led two or three years of big rallies in the

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Speaker 1: U S stock market. Is this another way in which

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Speaker 1: China then is perhaps another alternative because it looks like

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Speaker 1: the lights getting a little bit brighter for tech in China.

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Speaker 1: You see the news on Ali Baba leading the advanced

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Speaker 1: in the in the Golden Dragon index when ants approved

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Speaker 1: fundraising plan gave everybody a sense that, yeah, the regulatory

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Speaker 1: clampdown is is easy. Yeah, So I mean I wouldn't

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Speaker 1: necessarily play the Chinese stocks, the Chinese tech versus the

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Speaker 1: US tech. I think Chinese stick is benefiting, especially the

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Speaker 1: names that you're mentioning, you know, from that reopening as well. Um,

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Speaker 1: you know, on the US tech side, we actually I

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Speaker 1: think having a both um both consensus view on value,

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Speaker 1: on on growth versus value by balancing it. Most houses

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Speaker 1: I believe are still in the value camp, in part

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Speaker 1: because obviously we believe that we have seen most of

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Speaker 1: the move in the treasury market. We're overweight on bonds. Um.

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Speaker 1: You know, we do think that the market is probably

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Speaker 1: too optimistic about cuts in twenty three. But nevertheless, you know,

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Speaker 1: bonds are stabilizing that should have technology. There is still

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Speaker 1: that headwind obviously from everything that the tech site that

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Speaker 1: has UM advertising revenues in particular, UM. So you still

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Speaker 1: need to pick your battles and pick your stocks. But

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Speaker 1: you know, we're starting to see some interest coming back

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Speaker 1: from investors into those better town stocks UM you know,

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Speaker 1: especially the household names in the US. So I'm wondering

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Speaker 1: whether in terms of strategy here, whether the plan is

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Speaker 1: to go kind of full frontal at Chinese assets or

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Speaker 1: maybe look at markets that are correlated. And I'm thinking

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Speaker 1: of places like Vietnam, it's Taiwan, it's South Korea. So

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Speaker 1: you play economies and markets that kind of trade with

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Speaker 1: China to a great degree and perhaps take a little

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Speaker 1: bit of your exposure out of kind of direct investment

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Speaker 1: in China. Is that a way to work it? Or

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Speaker 1: or maybe that's kind of a fool's Errand when when

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Speaker 1: you're talking full frontal for us, the full frontal really

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Speaker 1: is the investment great bonds market, right, so that should

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Speaker 1: that is something that people especially deals with cash that

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Speaker 1: haven't put it to work. That's the first stop. And

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Speaker 1: then in the equity market, global equities, UM you know

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Speaker 1: is a mixed picture. UM. Europe in particular still probably

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Speaker 1: needs to see some downside. The US UM you know

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Speaker 1: needs to see downside on on the earnings, but has

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Speaker 1: a lot of quality stocks will probably do ass better

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Speaker 1: than than Europe. Asia as a whole is our biggest overweight,

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Speaker 1: which includes UM you know, China, which includes um as

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Speaker 1: the young countries some of them that you mentioned UM

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Speaker 1: and UM you know Hong Kong as well, So a

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Speaker 1: big opportunity set there, UM you know, very different in

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Speaker 1: terms of UM you know, the the the exposure to

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Speaker 1: the direct reopening in China. If you're more worried about

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Speaker 1: the timing of the reopening in China, then you can

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Speaker 1: go more into sort of structural demand growth for example,

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Speaker 1: the supplier the orientation which is really helping as the

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Speaker 1: young countries, and in that case, Thailand is an option.

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Speaker 1: In the Nichia is an option. Bill Almy a broad,

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Speaker 1: big question. By the end of the year, where the

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Speaker 1: wire the US tenure yield be. You've got about twenty

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Speaker 1: seconds to answer yes, so we believe it. It's going

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Speaker 1: to go to two and a half percent. If you know,

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Speaker 1: we do get an um uh you know, if it

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Speaker 1: did we get the market speculating on rate cuts in

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Speaker 1: twenty four and indeed as well, if you get the

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Speaker 1: US economy slowing down, um, you know, especially if you

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Speaker 1: go to the consensus of zero point three percent for

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Speaker 1: the US GDP film. Thank you so much for being

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Speaker 1: with this happy new year. William Sells is Managing Director,

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Speaker 1: Global c i O at hs PC Global Private Bank

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Speaker 1: and Wealth