Speaker 1: Let's get to us. She's chat our guest for the
Speaker 1: half hour. She is founder also the CEO at Crystal.
Speaker 1: He joins from Singapore. Thanks for being with us. We're
Speaker 1: still trying to kind of look at the fallout from
Speaker 1: this employment report. We've talked about the overall job growth.
Speaker 1: Wage growth was also much above forecast, so they're obviously
Speaker 1: inflationary pressures building on that front. We're going to get
Speaker 1: the CPI data this week. We also have from the
Speaker 1: Chinese perspective, a lot of inflation numbers we're going to
Speaker 1: be sorting through midweek. Are we near peak inflation right now?
Speaker 1: Or do you think we have a while to go?
Speaker 1: But it looks like we have a while to go,
Speaker 1: and a lot of data is going to come out
Speaker 1: this weekend next that will give us some indicators. But
Speaker 1: even if the data is let's say, a good wollatial
Speaker 1: on either side, and just like you have the non
Speaker 1: Bompado's much much above expectations, I still think the Fed
Speaker 1: is on its course to achieve close to a four
Speaker 1: per cent bind of the year. So certified BP seems
Speaker 1: like a done deal. Inflation does not seem to be
Speaker 1: well under control. Yes, you will have the base effect
Speaker 1: coming in, you will have certain energy items probably tapering
Speaker 1: a bit in terms of inflation. But I don't think
Speaker 1: we're out of the words yet. Do you have a
Speaker 1: sense of about when we might be out of the woods?
Speaker 1: When do you think inflation might peak? Where do you
Speaker 1: see that funds right settling? So I think that the
Speaker 1: right course of action or what the FED is probably thinking.
Speaker 1: And this is a guess. What make is that as
Speaker 1: you have a few rate hikes or certified PP coming in,
Speaker 1: it takes a quarter or two for the effects to
Speaker 1: seep in. So I think when you see the Q
Speaker 1: three results coming in, when you see the base effect
Speaker 1: coming in, it's likely to be Q four and that's
Speaker 1: when you could see a solid sign of inflation tapering.
Speaker 1: And that's the only way you would have a FED
Speaker 1: slowing down the pace of hikes. So I would say
Speaker 1: that seventy five fifty is what the FED may be
Speaker 1: thinking to achieve a four percent rather than seventy five
Speaker 1: centive and go about bob Board. And yet we have
Speaker 1: this inversion in the treasury curve which would imply that
Speaker 1: we're dealing with an impending recession. How do you square
Speaker 1: the two Clearly the bond market is saying that the
Speaker 1: FED is going to go overboard because they are predicting
Speaker 1: that FED is likely to not have inflation under control
Speaker 1: and hit the brakes very hard. So while there is
Speaker 1: a segment of the market at least the equities market
Speaker 1: is looking at the Goldilocks is back kind of scenario
Speaker 1: because you think that FED is engineering a good soft landing.
Speaker 1: But there is the bond market saying that, no, the
Speaker 1: FED has it wrong. Neither do they health control over inflation,
Speaker 1: and if they do manage to get some control over it,
Speaker 1: recession will be staring in our face. So they're clearly
Speaker 1: sending up very different message than the equities. All right,
Speaker 1: So where do you put money to work in this environment?
Speaker 1: Is there anything out there that's flashing a bye for
Speaker 1: you right now? So clearly short term bonds. We know
Speaker 1: that the rate is likely to be somewhere in the
Speaker 1: three and after four percent by the end of this year,
Speaker 1: and that's probably likely to happen, So so short term
Speaker 1: bonds is the safest play to go for. But otherwise
Speaker 1: on that also you still need to keep an exposure
Speaker 1: to commodities, maybe lower than before, but definitely need to
Speaker 1: be in as an inflation hedge, and she Sho want
Speaker 1: to turn our attention now to China and particularly that
Speaker 1: very impressive trade data we head out over the weekend.
Speaker 1: Exports growing eight hundred one billion dollar trade surplus. A
Speaker 1: lot of hyperens though in China. How sustainable does this
Speaker 1: look to you? So we have big advocators of value
Speaker 1: coming out of China in terms of investing in their
Speaker 1: great markets there. Having said that, the data that has
Speaker 1: come out it is quite positive on the on the
Speaker 1: export side, and on imports it's a bit lower. It's
Speaker 1: just a signal of front loading of orders given the
Speaker 1: COVID related lockdowns that we're seeing there. But clearly there
Speaker 1: is a positivity to the economy that could come out
Speaker 1: after the October Congress that happens there. However, there is
Speaker 1: the geopolitical risks that is overshadowing it. There is the
Speaker 1: whole mortgage related cloud that is also over there. But
Speaker 1: we think that for October you would see or you
Speaker 1: should see policy actions that would give a very positive
Speaker 1: momentum to the economy. So what are you singing then
Speaker 1: or predicting in the way of stimulus. So it's tough
Speaker 1: to say what exactly do they come out with, because
Speaker 1: they have kind of underwhelmed from the market expectations. But
Speaker 1: clearly a stimulus that leads to clearing of the clouds
Speaker 1: on the mortgage crisis and showing more easy stands is
Speaker 1: something that may be needed and that's what the market
Speaker 1: would look for. But as the uncertainty goes away, you
Speaker 1: would see that the focus will come on valuations and
Speaker 1: from a value perspective, it would look very attractive. So
Speaker 1: where do you put money to work? In China? Are
Speaker 1: there any particular sectors or stocks that look appealing to
Speaker 1: you at the moment. So we'll go with the broad
Speaker 1: index names, you know, the China ashes, rather than specific
Speaker 1: in tech or so. Of course avoiding property is prudent,
Speaker 1: but going with the broad index names is what we
Speaker 1: it would typically stick to. So much of the conversation
Speaker 1: has been around technology as well at Taiwan, the semiconductor industry.
Speaker 1: That's also a part of the South Korea story. Would
Speaker 1: you be tempted to put money away from China in
Speaker 1: certain pockets of the a pack that had to deal
Speaker 1: with technology, particularly the semiconductors, rather than some of the
Speaker 1: hardware names. It's definitely tempting, but we don't know whether
Speaker 1: this is going to be just a short term trend
Speaker 1: or a short term nijor reaction in the technology space.
Speaker 1: We still think that the U s pictech is well
Speaker 1: positioned despite all the rate hikes, and that's where I
Speaker 1: think buying going dips is likely to continue. So would
Speaker 1: rather go safe that we have clarity on the monetary
Speaker 1: policy actions and inflation. We have, of course seen some
Speaker 1: fairly active Chinese military drills around Taiwan following the visit
Speaker 1: of House Speaker Nancy Pelosi. How does the balance of
Speaker 1: excuse me, risks here look to you? Is it? Are
Speaker 1: there any risks for markets for growth or does this
Speaker 1: just look like domestic political cyber rattling. No, there's definitely
Speaker 1: geopolitical risk that one has to keep in mind. But
Speaker 1: given the priorities that the Chinese government would have, I
Speaker 1: would think that the importance to these should be lowered.
Speaker 1: I wouldn't comment on any any political moves that could
Speaker 1: happen at per se, but hoping that whatever is the
Speaker 1: impact of this is limited to certain import items or
Speaker 1: certain export items from Taiwan and stays there. The domestic
Speaker 1: story in China has always been I think a concern
Speaker 1: for people that play the equity market on the mainland,
Speaker 1: I mean very soft kind of consumer participation. You mentioned
Speaker 1: that the difficulty with the property market is being a
Speaker 1: contributor to that fact. Are you sensing a turn in
Speaker 1: in consumer sentiment or at least consumer behavior in China. Yeah,
Speaker 1: the domestic demand definitely has taken a double blow, both
Speaker 1: in terms of property as well as coordulated effects. And
Speaker 1: as the policy gets a bit easier on the COVID
Speaker 1: side as well as any physical stimulus comes helping the
Speaker 1: property sector, that's where we think the sentiment could improve,
Speaker 1: but we're still at least three to four months away
Speaker 1: from that happening very quickly. Is she short's your cash
Speaker 1: allocation like at the moment? So instead of cash, we
Speaker 1: prefer holding short term in western grade bonds because that's
Speaker 1: going to give you a lot more return banko back
Speaker 1: than anything else. Alright, as she ship Chanda, founder and
Speaker 1: CEO at Crystal, Thanks so much for joining us here
Speaker 1: on Bloomberg Daybreak. Asion