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Speaker 1: EDWARDO, thank you very much. Let's get to our guest,

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Speaker 1: Max Bonduri, CEO at s GMC Capital. Max. We've seen

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Speaker 1: some fairly solid gains here in Hong Kong and Chinese

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Speaker 1: equities of late, but we've also seen a lot of

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Speaker 1: stop and go policy in China on on COVID, on

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Speaker 1: on tech regulation, indeed even on how to deal with

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Speaker 1: the property crisis. How much can we believe that China

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Speaker 1: is now firmly moving away from its uh it's zero

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Speaker 1: COVID policies. Well, we're seeing steps in the right direction.

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Speaker 1: Whether they're absolutely absolutely going to walk away from zero COVID,

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Speaker 1: that still remains to be seen, but at least you're

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Speaker 1: seeing steps in the right direction. Again. Uh, if you

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Speaker 1: look at the movements we've seen in the equity market,

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Speaker 1: it seems like we may have put the bottom in

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Speaker 1: UM finally, I would say after two years which have

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Speaker 1: been a pretty tough and if you look from a

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Speaker 1: relative basis, there still is a lot of underperformance to

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Speaker 1: catch on. Therefore, as much as a short term will

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Speaker 1: continue to be bumpy and driven by headlines, and you're

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Speaker 1: going to see big games and big losses within any

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Speaker 1: given day, we think from here on the situation is

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Speaker 1: quite constructive for Chinese equities, and we expect games to

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Speaker 1: continue from here to at the end of the year. Bumpy,

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Speaker 1: he has this for a bump estimations of forty five

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Speaker 1: million daily cases. What does that mean for absenteeism and

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Speaker 1: supply chain disruption. Well, again, in terms of the numbers, yes,

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Speaker 1: it's it's important. It will have repercussion, But the bigger

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Speaker 1: repercussion term the supply chain was the fact that as

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Speaker 1: of now was zero COVID, and basically that was something

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Speaker 1: which was overhanging the whole system. If you're moving towards

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Speaker 1: a narrative whereby actually we can live with COVID, and

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Speaker 1: yes we people which are not going to be president

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Speaker 1: work when they actually do have COVID, but overall the

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Speaker 1: system is fine in living with it, then that already

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Speaker 1: sends a positive message. And as much as maybe for

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Speaker 1: a few weeks things could be slower because of higher cases,

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Speaker 1: if you look at the overarching picture, if that remains

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Speaker 1: more constructive than actually play chain sup play chain issues

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Speaker 1: can ease down over the time in months. Max, I'm

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Speaker 1: curious about you know, some of these gashes that we've

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Speaker 1: seen in the way that we used to do business.

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Speaker 1: How how deep and far reaching they will be. So

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Speaker 1: supply chains is one big part of it, but even

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Speaker 1: globalization aspects of of friendliness between China and many Western countries.

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Speaker 1: Also in the labor force, whether or not people feel

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Speaker 1: comfortable older people, do they feel comfortable going back to

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Speaker 1: work in the age of of the pandemic. How much

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Speaker 1: of this passes, how much of it stays with us

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Speaker 1: for maybe a long time, even a decade. It will

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Speaker 1: stay with us for even longer than that. Let's let's

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Speaker 1: be honest. We live in a deglobalizing world. So globalization

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Speaker 1: was up until I would say, maybe five six years back,

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Speaker 1: give or take. Uh since then, actually in the world

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Speaker 1: which is becoming a lot more focused on internal management

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Speaker 1: of the man and supply and it's going to keep

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Speaker 1: going that way, unfortunately, and things will become if you

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Speaker 1: want harder. So we have seen that countries do not

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Speaker 1: want to rely on other countries for for the production

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Speaker 1: of goods and of supply chains, and we have seen

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Speaker 1: that issues that countries have been experiencing, and then of

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Speaker 1: course feeds into this whole rhetoric of the restoring, especially

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Speaker 1: within the US we're seeing a lot of the production

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Speaker 1: moving back to the US, and the truth is that

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Speaker 1: all of that isn't all of that inevitably inflationary, and

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Speaker 1: does it mean that inflation will be entrenched We don't

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Speaker 1: go back to the great moderation that we saw over

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Speaker 1: the previous maybe fifteen years. Well, not necessarily likely. In

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Speaker 1: the short term, yes, because you do have to get

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Speaker 1: in those production systems up and running. So of course,

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Speaker 1: short term you will be inflationary. But longer term, if

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Speaker 1: you manage to have everything if you want in house,

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Speaker 1: within your country, within basically your boundaries, and something which

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Speaker 1: is efficient longer term can actually be deflectionary. Of course,

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Speaker 1: it all depends on how you're positioning yourselves and how

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Speaker 1: well you build up those those production chains and those

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Speaker 1: supply chain And I mean the USS is doing so

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Speaker 1: far it seems like the right steps. Some other countries

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Speaker 1: probably not as much. But short term, yes, they will

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Speaker 1: have inflation impractices because you have to set everything up,

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Speaker 1: But longer term it doesn't need to be if you

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Speaker 1: do it in a smart way. Yes, A lot to

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Speaker 1: consider here and in short term, a lot of bumps

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Speaker 1: on the road as well around the China reopening story

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Speaker 1: around how entrenched inflation is going to be and and

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Speaker 1: the near shoring debate also. So with that in mind,

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Speaker 1: where do you look for opportunities what tactor s tupe

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Speaker 1: of money to work in well? Fix income continues to

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Speaker 1: remain very attractive in the corporate space. Government space not

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Speaker 1: so much because treasuries have moved down in terms of

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Speaker 1: rates already quite a bit. They're probably too low now,

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Speaker 1: but corporate bonds continue to offer interesting relative and absolute yields.

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Speaker 1: Look at the value of the curve again the for

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Speaker 1: the six years kind of space. We are continuing to

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Speaker 1: add onto that, especially the subordinated space, because we're seeing

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Speaker 1: corporate spreads tightening and that of course you're going to

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Speaker 1: have a multiplier effect if you look at the subordinated

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Speaker 1: space in terms of equity. We already talked about China.

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Speaker 1: In terms of US, we have actually taken a bit

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Speaker 1: of profits over the last few weeks, and we would

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Speaker 1: like to wait for further corrections or potentially better entry

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Speaker 1: levels before using liquidity that we have available. Are there

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Speaker 1: some good opportunities for corporate bonds in Asia? If the

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Speaker 1: dollar weakens from here, if if we've seen the peak

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Speaker 1: in the in the green back, and we'll see some

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Speaker 1: local currency stability or local currency growth even in Asia

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Speaker 1: if Donna continues depreciating what at least saying at these levels,

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Speaker 1: are appreciating further. Yes, of course that is going to

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Speaker 1: be a positive for a number of the Asian economies

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Speaker 1: and especially emerging markets in general. We're not yet completely

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Speaker 1: bullish on emerging markets because we think it's a little

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Speaker 1: bit too early. The time will come, but not just yet.

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Speaker 1: Probably it will come in in the second half of

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Speaker 1: next year because things have to be get a little

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Speaker 1: bit worse before they get better. But in terms of

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Speaker 1: the Asian names um, current spreads are very wide. Therefore,

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Speaker 1: putting some money at work on some of the more solid,

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Speaker 1: more reputable names within the fixed income space definitely does

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Speaker 1: make sense, and a further able appreciation is just gonna help. Well,

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Speaker 1: we've got some important data points out this week, not

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Speaker 1: the least of which you as CPI, followed by a

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Speaker 1: fit decision and a new set of dots. So what

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Speaker 1: do you stand on the question of recession risk in

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Speaker 1: the US? We see recession probability as quite high um,

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Speaker 1: but that's not going to be particularly relevant. What is

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Speaker 1: going to be more relevant is how deep and how

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Speaker 1: long the recession goes. For aware of the idea that

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Speaker 1: we should probably end it relatively quicker than the previous recessions.

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Speaker 1: We don't see it a completely high recession, but we

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Speaker 1: don't even see a big drag down on on growth

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Speaker 1: um In terms of the plots and the dots of

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Speaker 1: upcoming fat they might probably want to sound a little

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Speaker 1: bit more hawkish than they have done in the past,

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Speaker 1: just because of the movements you have seen in rates

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Speaker 1: and and anti equities market, but overall, we don't expect

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Speaker 1: narrative to move too much. Max, you sound pretty comfortable.

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Speaker 1: You sound like you're you're you're pretty okay with current conditions.

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Speaker 1: I mean, I almost wish I had you to tuck

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Speaker 1: me in at night. Uh what what? What? What are

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Speaker 1: you worried about over the next six to twelve months.

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Speaker 1: I am very worried about things out there in the market.

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Speaker 1: It's not like I do not see risks and we

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Speaker 1: do not serious. Clearly, risks are there. But as long

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Speaker 1: as you know what the risks are and you can

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Speaker 1: put a probability to it, then automatically you can you

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Speaker 1: can use the capital that you have available. Clearly, geo

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Speaker 1: political risks are the ones that we keep looking out for.

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Speaker 1: And again we're not out of the woods. We're not

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Speaker 1: saying that from here on we're going to have a

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Speaker 1: nice rally and negoties and the and in bonds. We

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Speaker 1: do think that things will get tougher in Q one

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Speaker 1: and Q two over next year. But you know much

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Speaker 1: better than me that the market discounts things earlier, right,

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Speaker 1: So probably when you're going to feel the real economic

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Speaker 1: plane in main Street, which is going to come over

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Speaker 1: the next two quarters, giver take, the market might have

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Speaker 1: already discounted that. I might already be looking at the

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Speaker 1: future and you might have a big decoupling in terms

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Speaker 1: of the financial conditions in the market and in in

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Speaker 1: the real economy like we've seen and second hauntle next year,

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Speaker 1: it might not be as bad as some of the

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Speaker 1: people think. Alright, Max Bondori, thanks for looking into your

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Speaker 1: crystal ball force. Max's CEO at s GMC Capital. Thanks

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Speaker 1: for joining us on Bloomberg Daybreak Asia. And one of

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Speaker 1: the big variables of all the geopolitical risk as well,

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Speaker 1: the oil price. We got w t A trading a

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Speaker 1: little weaker again right now, we'll take a closer look

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Speaker 1: at markets for you in just a moment. Suffice to say,

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Speaker 1: it's looking like a risk of day around the region again,

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Speaker 1: the U S doll showing a little bit of strength.

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Speaker 1: Third the closer looking just a moment, this is bloomberg Yep,

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Speaker 1: the Bloomberg Dollar Spot index putting on a quarter of

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Speaker 1: one percent, so a pretty big move this morning on

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Speaker 1: a Monday doll again to the euro dollar five eleven.

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Speaker 1: This is bloomber