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Speaker 1: Catherine Young is our guest investment director at Fidelity International. Catherine,

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Speaker 1: the mood had been better for the past few days,

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Speaker 1: at least in Europe and on Wall Street. I guess

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Speaker 1: there was some thinking that there would be discussion at

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Speaker 1: the FAT about slowing down rate increases, at least that

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Speaker 1: discussion to be held, and we had earnings that were

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Speaker 1: seemingly better than expected. But now the earnings after the

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Speaker 1: belt today throws a little bit of a monkey wrench

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Speaker 1: into that. Uh, do you expect choppy trading from here? Yes? Indeed,

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Speaker 1: sentiments to all incredibly fragile. We do expect to see

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Speaker 1: further market volatility. Um all. I still on on on

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Speaker 1: the rate cycle globally speaking, as well as where inflation

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Speaker 1: does go. So, you know, I think going into the

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Speaker 1: end of the year again, it's going to be volatile. So, Catherine,

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Speaker 1: what's at the top of your list? There's so much

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Speaker 1: going on the you know, what's going on in China

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Speaker 1: was she's taking complete and total power and making markets

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Speaker 1: very nervous about the future of you know, any kind

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Speaker 1: of more capitalistic kind of economy. And on the other

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Speaker 1: end of the spectrum, the Federal Reserve, certainly at the

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Speaker 1: next meeting, it's going to expect you to do seventy

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Speaker 1: five basis points and maybe give us some signals about

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Speaker 1: how much the slowdown in December could be reflected in

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Speaker 1: something a little bit easier. When you look at the

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Speaker 1: number one thing right now that you have to keep

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Speaker 1: your eye on, is it easy to say what it is.

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Speaker 1: It's probably still the global risk of of policy in

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Speaker 1: terms of policy being behind the curb in terms of

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Speaker 1: even if we see inflation peak, so that really is

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Speaker 1: key and and then potentially you know, a global recession.

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Speaker 1: In terms of China going into the Congress, what was

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Speaker 1: interesting is that expectations were quite low, but markets don't

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Speaker 1: like uncertainty, and so that's the feeling when it comes

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Speaker 1: to on the political side of China that is. But

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Speaker 1: from an economic perspective, we can't forget that China is

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Speaker 1: in a very different position versus most developed markets. So

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Speaker 1: it does have the flexibility and the tool set to ease,

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Speaker 1: and we could see further easing, especially going into twenty

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Speaker 1: twenty three. Prices are down. Price can be a great

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Speaker 1: equalized or your thoughts there, there's so much in terms

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Speaker 1: of the opportunity set. Again from if we're looking in

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Speaker 1: from an economic evaluation perspective, um that there is lots

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Speaker 1: to do in terms of China. I mean, we're looking

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Speaker 1: at the internet sector, which you could actually classify as

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Speaker 1: value these days, and we're looking at the markets. And

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Speaker 1: the last thing you said before we took our little

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Speaker 1: break and hurried back to you, Katherine, is that the

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Speaker 1: internet sector is starting to look like a value segment now.

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Speaker 1: Some parts of it have done well, some have been

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Speaker 1: beaten up. So what do you mean by that? What

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Speaker 1: are you specifically looking at, oh, in terms of price

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Speaker 1: and in terms of just how the multiples have come off.

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Speaker 1: So what we have seen, especially during this rotation from

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Speaker 1: growth to value, is that those really well loved names

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Speaker 1: have performed incredibly well during twenty They're now looking very

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Speaker 1: very attractive given their earnings and their actual business models

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Speaker 1: versus what they're trading at. And I think that value

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Speaker 1: contrarian style bias is still very very important when it

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Speaker 1: does come to the Chinese market. What is one of

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Speaker 1: your best contrarian eyes It would be that dividend yield story.

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Speaker 1: That's that's happening in China, and you can find really

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Speaker 1: attractive dividends across a number of industries, is not just,

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Speaker 1: for example, the banks, and so I think that dividend

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Speaker 1: yield acts as a cushion during this period of volatili Again,

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Speaker 1: most people don't look to China for yield. It's more

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Speaker 1: Australia that they look to. Historically speaking, people have gone

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Speaker 1: to China for growth as well as that play on

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Speaker 1: the consumption theme, and I think that the rise of

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Speaker 1: the domestic investor BA in China is also very very

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Speaker 1: important to watch. What about the property sector, that was

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Speaker 1: one of the things people said that she being failed

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Speaker 1: to say much about at all in his big speech

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Speaker 1: at the party congress. Um. You think it's going to consolidate,

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Speaker 1: How is that going to happen in other investment opportunities there? Yeah,

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Speaker 1: it was interesting that nothing was really specifically said about

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Speaker 1: that and so already directed at the property sector. So

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Speaker 1: the tone is probably going to be less hawkish, but

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Speaker 1: we do expect to see this consolidation. So the property

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Speaker 1: sector likely to see what we saw in the cold

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Speaker 1: segment about five years ago. So the big guys come

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Speaker 1: bigger and you see this flight to quality. What's really

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Speaker 1: really important from being on the ground in China though,

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Speaker 1: is that these development and the property actually get all

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Speaker 1: the properties get developed and completed for the citizens under

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Speaker 1: the Common Prosperity Guidelines. We started off talking a little

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Speaker 1: bit about policy, central bank policy, and even government policy.

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Speaker 1: One of the reasons that investing in China right now

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Speaker 1: looks perhaps less attractive when we heard this from so

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Speaker 1: Gen Strategies yesterday that the case for Chinese equities as

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Speaker 1: weakened because of a higher risk premium, and and the

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Speaker 1: essential point being that China is making it plain and clear, Catherine,

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Speaker 1: that the emphasis is more on national security now than

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Speaker 1: on other areas. That doesn't necessarily mean China becomes a

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Speaker 1: much less attractive place to invest in, but it has

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Speaker 1: people asking the question. Yeah, and again it goes back

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Speaker 1: to that the point I made earlier about uncertainty. So

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Speaker 1: we're probably going to see further economic news flow come

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Speaker 1: through after the various you know, the working group commit

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Speaker 1: see the two party meetings, so in December and then

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Speaker 1: the first quarter of next year. But again there was

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Speaker 1: an emphasis as well on growth in terms of high

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Speaker 1: end manufacturing. The economic growth target still in place in

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Speaker 1: terms of you know where we're expected to see China

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Speaker 1: go by five, So we can't ignore the fact that

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Speaker 1: economic growth is still there and likely to be a

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Speaker 1: KPI for the local government officials. So Catherine, Uh, you

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Speaker 1: know the big sell off in uh you know, the

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Speaker 1: Hanks Hang Index and so off in Chinese starts, the

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Speaker 1: Golden Dragon tumbles and now things seem to be obstabilized.

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Speaker 1: Do you think s Jing Ping and his team care

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Speaker 1: if investors sell their starts off. You know, again, if

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Speaker 1: we look at the selling we did see on Monday,

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Speaker 1: it was it was really more somewhat of a bias strike.

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Speaker 1: So we did see a large amount of foreign selling.

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Speaker 1: But what was interesting to know as the domestic side

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Speaker 1: of things, and again that rise at the domestic investor

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Speaker 1: based whether it's in China, whether it's an India, weather

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Speaker 1: it's across the region, is really really going to be

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Speaker 1: key because you're not going to markets. And that's not

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Speaker 1: just equities, it's bonds as well. See that flight quality

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Speaker 1: in that shift of money away from the region because

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Speaker 1: the domestic money has a home bias. But China know

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Speaker 1: you're saying that it wants to attract more foreign capital,

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Speaker 1: it wants to make business better for foreign companies. Do

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Speaker 1: you see opportunity here? For a deal to be done

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Speaker 1: between say the West generally UH and China because both

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Speaker 1: sides have pretty good arguments about how the other is

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Speaker 1: um is sort of trespassing upon their own territory. Yeah,

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Speaker 1: potentially we could see further news and the market is

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Speaker 1: banking obviously a more positive news with the global events

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Speaker 1: and meetings coming up UM. So that's potentially another you know,

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Speaker 1: catalyst at the area focus for the market in this

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Speaker 1: period of volatility. In terms of currencies, We've got two

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Speaker 1: stars right now and they're both have been heading in

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Speaker 1: the negative directions, certainly the yen, uh and yuan. What

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Speaker 1: what what does that mean for the region broadly? Is

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Speaker 1: it just a currency issue? Is it's something that could

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Speaker 1: uh royal markets continually. I think it's mainly an issue

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Speaker 1: regarding whether the US dollars headed and all those risks

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Speaker 1: we spoke about upfront in terms of, you know, the

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Speaker 1: risks of bat global inflation, the risks about you know,

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Speaker 1: a potential global recession and habit that is. It's funny

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Speaker 1: you should mention Japan though, because over the past ten years,

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Speaker 1: Japan's actually performed incredibly well both from an economic perspective,

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Speaker 1: a governance perspective in terms of what the corporates have

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Speaker 1: been doing in a market perspective, but it's been completely ignored.

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Speaker 1: So definitely opportunities in Japan too quickly five seconds. Would

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Speaker 1: you start buying Japanese stocks now? Um? Yes, And I

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Speaker 1: think the Asian the whole is still is a very

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Speaker 1: attractive place versus the rest of the world. Well, thank

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Speaker 1: you so much. Catherine Young, investment director at Fidelity International,

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Speaker 1: covering a lot of investment and market grounds for US