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Speaker 1: What do you worry about the most in twenty twenty four?

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Speaker 2: Yeah, I mean, I must say twenty twenty four starting

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Speaker 2: off from a banking perspective quite well. We know all

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Speaker 2: the problems in the world, and we are always concerned

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Speaker 2: to how those are going to infect the operating results

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Speaker 2: of our banking or others or our customers. So far,

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Speaker 2: so good. I think the economy is in a reasonably

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Speaker 2: good place. Of course, the tensions that are carrying over

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Speaker 2: from last year or still there are obviously, the born

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Speaker 2: in the Middle East is a big for occupation and

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Speaker 2: concerns that that will spread, although it seems manageable so

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Speaker 2: far from a from an economic perspective obviously, perhaps not

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Speaker 2: from a humanitarian perspective, and likewise a conflict in Europe,

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Speaker 2: and likewise it did geopolitical attention. So but these are

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Speaker 2: I won't say we're used to these things, but they've

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Speaker 2: been around.

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Speaker 3: For a while.

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Speaker 2: It it would appear that no one has an interest

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Speaker 2: in taking very substantial specific conflicts and turning them into

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Speaker 2: major global operations. And I hope I'm not wrong on that.

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Speaker 4: We were expecting, I guess the economy to really suffer

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Speaker 4: more than expect in twenty twenty two. Does that Q

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Speaker 4: market thinking on how resilience twenty twenty four.

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Speaker 1: Is going to be.

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Speaker 2: I think there's a risk of some complacency building in

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Speaker 2: that because we haven't had a big interest rate related

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Speaker 2: correction and economic activities so far.

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Speaker 3: That we're out of the woods.

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Speaker 2: But obviously the signs are encouraging, and I think there's

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Speaker 2: no doubt that in order to complete the fight against inflation,

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Speaker 2: we're going to have to have some slowing economic activity,

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Speaker 2: and in particular we're going to have to have a

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Speaker 2: slightly less robust jobs market, in particular.

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Speaker 3: In the US. But it is very robust right now.

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Speaker 3: The things are going in the right direction. Yeah.

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Speaker 2: When I look at China with their GDP figures yesterday,

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Speaker 2: in line with expectations, I think China's going through a

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Speaker 2: very major transition in their economy from from old economy

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Speaker 2: to new economy and dealing with the aftermath of the

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Speaker 2: geopolitical tensions and tariffs and restrictions and things of that nature.

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Speaker 2: And China plus one we know the story, and I

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Speaker 2: think against that backdrop, China's actually doing quite well. The

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Speaker 2: new economy sectors are booming, and the old economy sectors

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Speaker 2: are really struggling, led by property. So I look at

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Speaker 2: that whole equation and say, there's plenty to be optimistic

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Speaker 2: about in twenty twenty four.

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Speaker 1: So what do you do with property in China?

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Speaker 4: Again, it's unclear how you know the authorities will deal with,

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Speaker 4: what kind of leeway they have or appetite they have

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Speaker 4: for letting some steam out.

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Speaker 2: I mean, for us, it's a relatively small problem. We've

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Speaker 2: taken some losses over the past three years. They our

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Speaker 2: credit losses overall are very small. The bulk of them

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Speaker 2: have come out out of China, so it's not a

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Speaker 2: huge preoccupation. I think the Chinese authorities have stabilized the

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Speaker 2: property market, but it hasn't corrected, and it hasn't fully.

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Speaker 3: The prices haven't cleared right than the market hasn't cleared.

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Speaker 3: So I think we'll.

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Speaker 2: See some ongoing support measures to just let the market

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Speaker 2: to coulibrate. But that's just one part of the old

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Speaker 2: economy in China. The historic drivers of GDP growth that

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Speaker 2: are in reverse, and some other elements of the really

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Speaker 2: heavy manufacturing sectors and some other more commoditized manufacturing are

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Speaker 2: moving out to see the China plus one or cost

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Speaker 2: competitive minism, and I think the result of that is

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Speaker 2: China has to focus on growth in the areas where

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Speaker 2: the growth opportunities are there for them, and they are

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Speaker 2: they are.

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Speaker 4: So if you look at twenty twenty four and beyond,

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Speaker 4: what do you do with India for example from an.

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Speaker 3: Economic perspective, and yeah, we invest heavily India. It's a

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Speaker 3: fabulous growth story for years to come.

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Speaker 2: The economy is in quite a bit smaller than China,

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Speaker 2: but they're determined to catch up and over a period

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Speaker 2: of time I think they can what time frame, say

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Speaker 2: the Chinese economy and GDP per capita in China is

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Speaker 2: one quarter of sorry in India is one quarter of China,

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Speaker 2: So a long way to go. But if China closed

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Speaker 2: the gap to big chunks of of the middle income

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Speaker 2: world over a twenty year period, I think that's a

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Speaker 2: reasonable aspiration for India as well, and they're well on

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Speaker 2: that track, then they can consistently generate seven eight percent growth,

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Speaker 2: which they should be.

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Speaker 4: Able to talk to me about the FED, so you know,

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Speaker 4: the March is definitely pricing in a lot of cuts.

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Speaker 1: Yeah from the FED.

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Speaker 4: I don't know what that means for your trading for

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Speaker 4: are they ready like this is we could see a

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Speaker 4: lot of volatility, we could.

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Speaker 3: Uh, oh, the markets have been quite well behaved.

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Speaker 2: I think the Father's done a good job of forecasting

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Speaker 2: and and and indicating for guidance their intentions. I think

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Speaker 2: the market might be a little bit ahead of itself

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Speaker 2: in terms of red cuts this year. I have no

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Speaker 2: doubt that we'll get to red cuts at some point.

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Speaker 2: I suspect it'll be a little bit later in the year.

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Speaker 2: So we have this debate within center chart it all

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Speaker 2: the time. And uh, you know, we're we're positions in

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Speaker 2: terms of our are from a treasury perspective, we're partially hedged,

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Speaker 2: but you know we're okay.

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Speaker 3: Sitting type for a little bit on the rest And where.

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Speaker 1: Do you think treasuries are headed?

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Speaker 2: You know, we've seen a big correction in treasuries right

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Speaker 2: with with with ten years dripping almost one hundred racist points.

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Speaker 3: That's a big that's a big move down.

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Speaker 2: If we if we think that the stable you know,

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Speaker 2: long term risk free rate, the short term rate is

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Speaker 2: going to be something like two and a half or

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Speaker 2: three percent, then Treasury should settle somewhere around where they

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Speaker 2: are somewhere around four percent, which I think is probably

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Speaker 2: pretty healthy for the economy as well.

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Speaker 1: When you look at trading.

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Speaker 4: I don't know whether you're starting to now try and

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Speaker 4: calculate what Trump in the White House means for policy,

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Speaker 4: for markets.

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Speaker 1: For trade.

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Speaker 3: It's very hard to know.

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Speaker 2: And we know that the devasit balloon under Trump pre COVID,

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Speaker 2: obviously a balloon during COVID, but that didn't balloon any

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Speaker 2: less under the Biden administration.

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Speaker 3: So where we go from here?

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Speaker 2: I mean, there's very little sign of fiscal discipline from

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Speaker 2: either party right now, which is I think concerning as

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Speaker 2: but reality finds the ways of biting.

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Speaker 1: What does that mean? Like a treasure reaction that doesn't work?

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Speaker 1: Could it be really ugly?

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Speaker 3: It could be.

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Speaker 2: I think it's much more likely that you just get

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Speaker 2: a little bit of a buyer's boycott and you see

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Speaker 2: treasure yields that are not behaving consistent with the way

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Speaker 2: the FED would like short.

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Speaker 3: Term rates to play out.

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Speaker 2: And yeah, I failed auction would certainly be a message,

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Speaker 2: but I think that would.

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Speaker 1: Most likely that possible in the industry.

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Speaker 2: It is, but I think it's much more likely to

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Speaker 2: be attributed to technical features of the treasury market, And

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Speaker 2: of course, I mean you've spoken with a number of

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Speaker 2: of my counterparts of the US banks who are very

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Speaker 2: concerned about the capital rules that are coming in place

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Speaker 2: and the degree to which it hits the trading books,

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Speaker 2: which would have the effective withdrawing capital from that market,

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Speaker 2: which is already pretty stressed. So I think that's it's

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Speaker 2: much more likely to be a technical thing than a

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Speaker 2: fiscal thing.

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Speaker 1: Are we so sure?

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Speaker 4: We talk so much about what you know Trump in

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Speaker 4: the White House means do we know? Do you understand

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Speaker 4: what policies a second time Biden administration puts in place?

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Speaker 2: Well, I would think a second time Biden administration would

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Speaker 2: find some fiscal rectitude.

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Speaker 3: I think they were.

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Speaker 2: They inherited an economy that was coming out of COVID

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Speaker 2: and and made sure that the things the pump state

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Speaker 2: prime as it were, and we had significant cost of

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Speaker 2: living crisis at.

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Speaker 3: The time for all the reasons we understand.

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Speaker 2: So I think that the Biden administration, led by the

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Speaker 2: Secretary of the Treasury on the on the economy side,

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Speaker 2: and the fedorthodox and no one, no country can run

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Speaker 2: the kind of bunche of deficits of the US is indefinitely.

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Speaker 2: So I think they're very orthodox and I think they

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Speaker 2: would take a conventionally orthodox approach. Probably not can hear

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Speaker 2: much about that before the election, but that's that's politics.

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Speaker 4: Bill HSBC also has Zing, which is basically trying to

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Speaker 4: rival Revolute. And why is I mean, do some of

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Speaker 4: the big banks really have a chance of going after

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Speaker 4: these fintech companies?

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Speaker 1: Well?

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Speaker 2: Absolutely, We've set up a dozen digital banks around the world.

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Speaker 2: Now we've got cross border payment platforms. We are, Darius say,

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Speaker 2: there's really nothing that you could do on Revolute or

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Speaker 2: Wise that you can't do on a standard charter or

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Speaker 2: many other bank mobile aps.

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Speaker 1: So why do we not?

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Speaker 3: We are? We are?

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Speaker 2: I mean our business I think last year we completed

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Speaker 2: eighty two percent of our transactions were straight through no

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Speaker 2: human contact. It's I don't know if it's the highest

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Speaker 2: in the banking industry, but it's a very high percentage.

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Speaker 2: We may be the only bank that actually discloses that figure,

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Speaker 2: so it's a little bit hard to know. But no,

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Speaker 2: we've we've learned from these guys. When we set off

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Speaker 2: our digital back in Hong Kong four years ago, we

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Speaker 2: looked at the best in class.

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Speaker 3: So digital banks around the world.

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Speaker 1: Including which is who's best in class.

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Speaker 2: Well, we looked at people like N twenty six, I mean,

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Speaker 2: Revolute is very good. We looked at the digital offerings

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Speaker 2: in existing banks, we benchmarked ourselves against those and we

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Speaker 2: came up with something that we think is best in class.

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Speaker 2: We're so happy with it that we rolled out the

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Speaker 2: same tech sac in Singapore. We've gotten almost fifteen percent

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Speaker 2: of the bankable population in Singapore has opened an account

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Speaker 2: with our digital bank in Singapore. It's called trust Bank.

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Speaker 2: It's the fastest growing digital bank in the world. Now

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Speaker 2: it's Singapore. It's obviously roads.

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Speaker 3: If we could do the same thing in China or

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Speaker 3: India would really be in the money or the US.

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Speaker 3: But the UK, I think is pretty thoroughly banged.

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Speaker 2: And starting with the banks that you mentioned at banks

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Speaker 2: like Manzo which are excellent in addition to excellent local banks.

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Speaker 2: And we don't have a retail presence in the UK,

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Speaker 2: but we do have a space, we do have a

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Speaker 2: banking license