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Speaker 1: Let's get to our guest, David Chow, global market strategist

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Speaker 1: for the Asia Pacific at Investco. So it's a little

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Speaker 1: bit of a peculiar week. I think many thought that

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Speaker 1: we'd see a much bigger sell off in the equity markets.

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Speaker 1: Everybody is sounding barrish. Everybody seems to think that the

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Speaker 1: Fed is Hawcasian is going to stay so for a

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Speaker 1: considerable period of time. The market seems to be saying

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Speaker 1: to them, we've already discounted it. David, what do you think? Well?

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Speaker 1: I think the key question is whether this UM, this

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Speaker 1: relief rally that we've seen in the US UH petle

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Speaker 1: has legs UM and I think that and I think

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Speaker 1: that that would be very contingent on what j Powell

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Speaker 1: says at Jackson poll Um in the coming hours and

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Speaker 1: whether that's reflective of whether we've seen a peak and

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Speaker 1: inflation or not, and whether the US UM is is

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Speaker 1: going to continue to face some recession fears. I'm the

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Speaker 1: mindset that I think that the Fed is going to

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Speaker 1: continue to tighten UH monetary policy UH, and that some

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Speaker 1: of the intercession fears, though are are perhaps some are

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Speaker 1: overblown a bit UM and that the Fed can go.

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Speaker 1: I can't orchestrate a bit of a software when we

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Speaker 1: look at the market action if it is quite priced

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Speaker 1: in that we are going to hear a hoki is

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Speaker 1: j pal? What do investors focus on next week? Which

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Speaker 1: assets are going to outperform in the aftermath? Well, I

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Speaker 1: think that many in the APAC region are watching closely

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Speaker 1: because previously there there have been muscle memories that rising

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Speaker 1: rates and tightening monetary policies and view US would certainly

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Speaker 1: UH impair emerging market assets. Now, I think that this

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Speaker 1: time around, a pack assets are a lot more insulated

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Speaker 1: given the better external fundamentals, which I think that allow

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Speaker 1: APAC policymakers central central bankers to focus perhaps more on

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Speaker 1: domestic conditions. What do you make of the stories that

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Speaker 1: we've done down Jones and Bloomberg reporting about UH this

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Speaker 1: improvement in talks between US and China fishers on delisting. Well,

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Speaker 1: we've been down this road before where there's been both

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Speaker 1: positive and negative developments, and and you know, for me

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Speaker 1: once um so I would say that I'm still standing

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Speaker 1: on the sidelines, especially for a d R S, because

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Speaker 1: I think that the risk still remains um but I

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Speaker 1: think that the valuations are are pretty compelling me, especially

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Speaker 1: for those that think that a deal can be made

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Speaker 1: in terms of I guess the concerns about the property

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Speaker 1: market in China, though, Is this big infrastructure boost that

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Speaker 1: we've seen from authorities going to be enough to turn

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Speaker 1: things around? I think it's certainly a start that the

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Speaker 1: government is showing um that they are quite um in

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Speaker 1: the driver's seat right now when it comes to trying

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Speaker 1: to uh provide a floor to the property market. I

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Speaker 1: don't think anyone party or support measure will bring a

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Speaker 1: turnaround and restore confidence to home buyers because so far

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Speaker 1: we've seen lower mortgage rates haven't really translated into higher

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Speaker 1: property sales because of the current lack of confidence in

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Speaker 1: large real estate developers and also um lack of confidence

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Speaker 1: in the pre sales model. So I think that the

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Speaker 1: central government will need to implement perhaps even further and

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Speaker 1: more credible measures to ensure that some of these stalled

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Speaker 1: projects are completed and delivered to paying households. So, outside

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Speaker 1: of China and perhaps Japan, the big story obviously is inflation,

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Speaker 1: whether or not it's peaked, and we we had that

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Speaker 1: move down in the last data on cp I, But

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Speaker 1: can we be sure that we won't see a rebound

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Speaker 1: inflation because with natural gas prices this high, and what's

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Speaker 1: happening with food, you wonder, well, I think that's a

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Speaker 1: good point to make. I think that's perhaps certain components

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Speaker 1: of inflation have already peeked. If we look at inventory levels, Um,

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Speaker 1: they they're well ox. I think goods um inflation may

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Speaker 1: have peaked in the US. Wage prices could be coming

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Speaker 1: down UM soon as well. Um, But you're right. I

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Speaker 1: think that when it comes to energy, energy prices that

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Speaker 1: I'm going to have come down, but I think it's

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Speaker 1: possible that they could re accelerate, especially if there's a

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Speaker 1: threat that Russia could be cutting or retailing um. All

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Speaker 1: the gas applies to Europe. I wanted to ask them

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Speaker 1: more in terms of some of the commodity impacts of

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Speaker 1: exporter of countries when you have this bification between stimulus

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Speaker 1: from China and the aggressive tiening from the FIT. Sure,

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Speaker 1: when we look at the Apack region, certainly UH export

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Speaker 1: commodity export oriented economies like Australia and Malite Malaysia, their

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Speaker 1: equity markets have actually outperformed the broader Apack region. And

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Speaker 1: I think that this additional stimulus from the Chinese government

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Speaker 1: should ride a boost both to infrastructure investments and also

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Speaker 1: to the house market as well. So I think that

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Speaker 1: UM some of the similar should flow through to the

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Speaker 1: broader APEC region. What is your single number one conviction

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Speaker 1: by at the moment, I would say by Chinese equities.

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Speaker 1: They've really given up much of the gains that we

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Speaker 1: saw UM earlier over the past couple of months due

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Speaker 1: to the reopening from the lockdowns that we saw in

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Speaker 1: Shanghai and other places, and I think that there could

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Speaker 1: continue to be a risk on in Chinese equities UM

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Speaker 1: over the next couple of months, especially as we head

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Speaker 1: into the all important Party Congress perhaps in November this year.

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Speaker 1: What about Hong Kong, I mean we're looking at, of

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Speaker 1: course these take players that I just mentioned in the

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Speaker 1: data Chick, but you've still got a lot of concerns

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Speaker 1: about Hong Kong's I guess health is a financial hub

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Speaker 1: when we're continuing to see it follow the dynamic zero

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Speaker 1: policy of China. That's right. I think that UM. I

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Speaker 1: think Hong Kong stocks are cheap, but at the same

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Speaker 1: time they're not UM. They don't get the benefit of

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Speaker 1: loosening monetary policies, for example, like in China, or the

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Speaker 1: fiscal stimulus that we're seeing in China as well. So

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Speaker 1: I think for Hong Kong stocks, I think a lot

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Speaker 1: of that will be contingent on how quickly that they

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Speaker 1: can open up. We're seeing some positive signs, but um,

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Speaker 1: but perhaps it could take a little while longer. David,

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Speaker 1: after the Party Congress, do you think that She Jinping

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Speaker 1: doubles down on common prosperity or eases up a little? Well,

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Speaker 1: I think that the common prosperity theme has has perhaps

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Speaker 1: taken a bit of a break over the past couple

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Speaker 1: of months and orders given UH the priority on on

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Speaker 1: COVID zero and also on stabilizing the economy. And I

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Speaker 1: think perhaps some of these common prosperity measures may have

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Speaker 1: been UM may have elicited a few uncertainties regarding some

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Speaker 1: of the policies are regarding certain industries. But I do

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Speaker 1: think that common prosperity should start reassall perhaps um UM

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Speaker 1: next year. How much of a complication for authorities is

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Speaker 1: this UAN near a two year low? I mean, yesterday

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Speaker 1: we saw some kind of intervention to try and UH

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Speaker 1: stem that weakening. You one with the fix yesterday, the

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Speaker 1: strongest spires since February. Well, I think that UM, while

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Speaker 1: a weaker run, it certainly benefits China's exports, it certainly

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Speaker 1: does not instill confidence, I think, in especially for foreign

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Speaker 1: investors looking at Chinese assets. And I think that's why

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Speaker 1: we saw a stronger fixing UM for the R and B. Now,

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Speaker 1: going forward, I think that policy makers will certainly try

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Speaker 1: to balance this and UM. I think that the signals

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Speaker 1: that they're sending is that they certainly don't want UM.

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Speaker 1: They want financial stability heading into that party Congress. So

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Speaker 1: let's go back to the big question Fed hawkishness. It's

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Speaker 1: a process. If you think it's peaking, you get a

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Speaker 1: slowing of interest, eight rises, and then you get a pause,

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Speaker 1: and then you finally get them saying the next move

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Speaker 1: is down. You don't think we're in that process at

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Speaker 1: the moment. I think that the FED is walking a

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Speaker 1: very tight line and trying to thread this needle UM.

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Speaker 1: And so while financial conditions UM have have improved and

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Speaker 1: loosened a bit UM, I think that the FED is

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Speaker 1: also watching that closely. That they certainly want to normalize

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Speaker 1: monetary policy. They certainly want to uh, you know, contract

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Speaker 1: the economy to the extent that inflation comes down. So

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Speaker 1: I think that we're in this very tough balance here, David,

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Speaker 1: thanks as always, David Child, global market strategist Asia Pacific

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Speaker 1: Investco from Hong Kong for us here on Bloomberg Daybreak

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Speaker 1: Asia