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Speaker 1: Let's get to our guest, David Chow, Global Market Strategies

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Speaker 1: for the Asia Pacific at Investco. Kind of easy to

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Speaker 1: get fatalist in thinking here. I'm looking at the Bespoke

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Speaker 1: report that's out that talks about the last many months

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Speaker 1: of a bearer market are far more painful than the

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Speaker 1: early part of the downturn, and it sort of pairs

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Speaker 1: with a comment that I wanted to put two guests,

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Speaker 1: so I'll give it to you that it's pretty painful

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Speaker 1: to go from pricing in a slowdown to pricing in

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Speaker 1: a recession, and it seems like that's coming up next.

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Speaker 1: Do you agree or disagree? Well, I think that a

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Speaker 1: recession looks increasingly like that, I think the next twelve months,

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Speaker 1: and so I think maintaining exposure for investors to defensive sectors,

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Speaker 1: especially things like consumer stables and healthcare makes sense. I

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Speaker 1: think that we really have to pull in in time

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Speaker 1: for some of the bumpy um some of them that

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Speaker 1: could becoming. And when those bumps coming, what kind of

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Speaker 1: I guess further shocks are we expecting to invest a sentiment?

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Speaker 1: I think right now we'll continue to look at US earnings,

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Speaker 1: and so far earnings have been have been okay for

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Speaker 1: this year, but I think going forward, given how the

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Speaker 1: bed is going to continue to contract um the US economy,

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Speaker 1: I think that is certainly not going to be good

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Speaker 1: for a company earnings and dividends um. So I think

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Speaker 1: that we may be an environment or risk taking is

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Speaker 1: not rewarded, and so so we continue to be overweight

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Speaker 1: things like government bonds and also alternatives such as reads.

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Speaker 1: One of the tricky things here is that if you're

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Speaker 1: looking at companies to buy, I mean, let's take a

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Speaker 1: look at Alca, it's a sort of cautionary tale. You

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Speaker 1: think that a commodity linked company like that would be

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Speaker 1: doing fine this year. Aluminate prices though, are down. Yet

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Speaker 1: the company's costs because of labor costs and and other

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Speaker 1: and surging energy costs are quite high, and so you know,

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Speaker 1: they are pummeled down five percent in the regular session,

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Speaker 1: down in after hours. You know, it's even if you

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Speaker 1: you've got costs up, even the safe companies look a

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Speaker 1: little tricky. That's right. I would say that there there

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Speaker 1: continues to be a macro trade now as the kind

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Speaker 1: of global macro environment is deteriorating. Certainly, commodity companies are

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Speaker 1: very much impacted UM, you know. At the same time

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Speaker 1: we also look at pockets where there could be UH

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Speaker 1: continued resilience UM. Some of the more defensive sectors UM,

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Speaker 1: such as healthcare side, maybe some of the early cyclicals

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Speaker 1: could make sense on the case inflation and interest rate

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Speaker 1: surprise on the on the downside. On the more broad point,

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Speaker 1: when we've been talking about the FED and we've been

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Speaker 1: listening to some more views from FIT speakers, particularly with

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Speaker 1: James Bullard seeing this end to front loading, where do

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Speaker 1: we see a peak then in the tenure, Well, I

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Speaker 1: think that the tenure could actually still trug up perhaps

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Speaker 1: a little more to you know, on a four and

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Speaker 1: a half percent given where inflation is. We have to

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Speaker 1: remember that prior to the GFC that the tenure was

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Speaker 1: around five percent and inflation was around two p and

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Speaker 1: so that lasts for agastiberal amount of period of time.

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Speaker 1: So I think that we could be UM in a

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Speaker 1: period where where we should be getting used to UM

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Speaker 1: the tenure at a ATAM or elevated levels and what

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Speaker 1: this means to stop. So, in terms of your top

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Speaker 1: three conviction calls, I don't know if one would be

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Speaker 1: generally Asia, but we did have that call from Nomura

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Speaker 1: and they join Morgan Stanley and saying close to a

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Speaker 1: bottom could happen within the next few weeks. Your thoughts

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Speaker 1: on that, I'm not sure we're we're perhaps close to

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Speaker 1: the bottom. We could be bumping along the bottom for

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Speaker 1: whiles to Paul, but I would say that the APAC

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Speaker 1: region is relatively insulated from high levels of inflation and

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Speaker 1: also aggressive monetary tightening from the Central Bank, and so

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Speaker 1: from the from those angles, it's some you know, on

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Speaker 1: a much better footing. But what I do worry about

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Speaker 1: for the age of the region is they're quite dependent

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Speaker 1: on the European and US markets for their exports, especially

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Speaker 1: the North Asian markets, and so I think that we

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Speaker 1: really have to see how how global demand um is

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Speaker 1: slowing and whether that will have any more significant impact

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Speaker 1: the Asian economy. Let's talk about what your view is

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Speaker 1: in China specifically, and particularly when you look at the

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Speaker 1: a d R s tumbling on the lowest in more

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Speaker 1: than nine years, and you've got, of course, the Party

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Speaker 1: Congress continuing, You've got Beijing COVID cases at a full

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Speaker 1: month high. How do you kind of navigate all of this,

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Speaker 1: particularly when we're still not even clear on the direction

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Speaker 1: of COVID zero and what the economic growth figures are

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Speaker 1: at the moment. That's right. I think that investors are

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Speaker 1: very much looking for to components UM in China, specifically

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Speaker 1: the property market and whether we're going to see a

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Speaker 1: bottoming there or UM, and also the COVID zero policies

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Speaker 1: if we're want to see a a pivot. We haven't

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Speaker 1: gotten any signal that UM that policymakers are going to

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Speaker 1: institute any kind of UM any significant changes there, and

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Speaker 1: I think that UM that that could that could very

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Speaker 1: much impact investor sentiment on Chinese shares for the time being.

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Speaker 1: So if you look at these different asset classes, stocks, bonds,

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Speaker 1: and let's say credit, will divide it into high yield

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Speaker 1: and investment grade versus property. If you had to direct

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Speaker 1: money to one of those, say five, where would it be?

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Speaker 1: I would I would direct the money to UM, to

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Speaker 1: more safety assets such as government bonds UM, investment grade

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Speaker 1: debt UM and also alternatives such as reachs that could

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Speaker 1: capitalize on things like UM, you know, higher inflation. And

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Speaker 1: so I think that we we could be in this

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Speaker 1: environment where we're playing defensive makes sense. We're talking so

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Speaker 1: much about hot inflation pressures and what central banks around

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Speaker 1: the world are doing to try and tame them. What

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Speaker 1: is the bigger crossis here? Though? I mean, when you

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Speaker 1: go at Europe and the fact that some people may

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Speaker 1: not even be able to afford the energy bills, how

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Speaker 1: much should we be paying attention to that? I think

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Speaker 1: that is quite worrying, especially as Europe um and and

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Speaker 1: the uncertainty for the gas cutoffs in the wintertime from Russia.

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Speaker 1: There's certain economies that sand to be a better position

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Speaker 1: since they you know, they have up more capacity, say,

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Speaker 1: but there are other economies, and in southern Europe that

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Speaker 1: could be severely more impacted. And I think that that's

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Speaker 1: something that we're keeping a very close eye on. What's

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Speaker 1: the most um, what's the most sort of contrarian call

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Speaker 1: you'd make at this moment? I'd say that the contrarian

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Speaker 1: call right now would be to start looking at at

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Speaker 1: Chinese equities. Given the current valuations, I think a lot

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Speaker 1: of the negative views has been priced in Chinese stocks,

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Speaker 1: especially A shares the onshore. Chinese stocks are trading at

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Speaker 1: historical lows, and especially on a relative to US and

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Speaker 1: and other places. UM I'd also look at the rest

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Speaker 1: of the APAC region as well, all right, David, Always

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Speaker 1: a pleasure, Thank you. David Chow is Global market Strategist

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Speaker 1: Asia Pacific Inbisco, on the line from Hong Kong Forest

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Speaker 1: here on daybreak Asia