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Speaker 1: Let's get to our guest. Vikash Bersade is with us,

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Speaker 1: a portfolio manager for Asian equities at MMG Investments who

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Speaker 1: joins from Singapore. Vikash, thanks for being with us. The

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Speaker 1: focal point today is really on the geopolitical risk and

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Speaker 1: the extent to which the market has it right. I mean,

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Speaker 1: has it been discounted in the way that's appropriate in

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Speaker 1: your view or is there a lot more risk when

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Speaker 1: it comes to geopolitics at the moment. Hello, good morning,

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Speaker 1: Great to be back here to answer your question. I

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Speaker 1: think the what is surprising to me is the extent

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Speaker 1: to which it seems like the market of move past

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Speaker 1: what is happening in Europe. If you compare how the

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Speaker 1: market is reacting to Avenue headline today to late February

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Speaker 1: early March, that's clearly different. So that I think that

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Speaker 1: is not that's still not done. There is still impact

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Speaker 1: that real impacts on companies and economies. From that. You

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Speaker 1: agree with that with Gue, political risks in other parts

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Speaker 1: of the world, and it seems like the markets are

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Speaker 1: surprising the Resinally, what is the biggest driver of markets

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Speaker 1: then at the moment, because you know, we do have

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Speaker 1: that uncertainty political backdrop, as we mentioned, but also we

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Speaker 1: have some encouraging science coming out of China and possibly

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Speaker 1: a Fait pivot in three as well. So what's the

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Speaker 1: key catalyst that you're watching. I think if we just

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Speaker 1: get right down into companies and sectors, the most surprising

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Speaker 1: thing to me is the amount of dispersion we've seen

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Speaker 1: in the current earning season intrasector and among peers around

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Speaker 1: the world. So if you pick any sector, whether it's

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Speaker 1: let's say we start in India with the farmer companies

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Speaker 1: or consumer companies, the leaders with pricing power and reasonable

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Speaker 1: cost structures are beating expectations. The ones who don't have

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Speaker 1: those things are missing. If you look at companies reliant

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Speaker 1: on AD spending and search, there are companies in Korea

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Speaker 1: that are beating on those on in those businesses, Whereas

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Speaker 1: we've all seen what has happened with leading companies in

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Speaker 1: the US that are driven by ad ad spending and

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Speaker 1: by search. So and and we see that across sectors

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Speaker 1: across the region in Asia and so that that dispersion

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Speaker 1: has been what has been driving the markets in the

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Speaker 1: very short term. So and you put your finger on

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Speaker 1: something that's very interesting, and I'm wondering what that speaks to,

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Speaker 1: I mean, the unevenness of it all. I think what

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Speaker 1: we're seeing is in the in this environment where UH

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Speaker 1: revenue growth is challenge, revenues are are flowing to those

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Speaker 1: with pricing power, with with genuine modes and the earning

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Speaker 1: the margin expansion is real for the companies that have

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Speaker 1: operating leverage and who don't have very heavy balance sheets.

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Speaker 1: So within within sectors around the world and across the

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Speaker 1: region here in Asia, we see many examples of of

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Speaker 1: polar opposites within sectors. Also, what I would like to

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Speaker 1: highlight is if you one area that we are very

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Speaker 1: excited about, if housing in India. Now, when you start

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Speaker 1: talking about housing, people's thoughts shift to China, they shift

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Speaker 1: to the US, they shift to Australian New Zealand, and

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Speaker 1: Western Europe. What is going on on the ground right

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Speaker 1: now is very different in India. And it's not just

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Speaker 1: mortgage finance companies and banks, but it is the companies

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Speaker 1: that are part of that broader universe of companies related

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Speaker 1: to housing. Adhesives ain't UH consumer electronics, white goods. The

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Speaker 1: demand is very robust hypes, uh um plastics and and

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Speaker 1: we see that continuing, Yes, it's an interesting point that

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Speaker 1: you bring up because people are obviously more familiar with

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Speaker 1: the property story as it relates to China or the US.

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Speaker 1: So if you're looking to get involved in the property

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Speaker 1: story in India, can you give us any specific names

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Speaker 1: that you'll be looking at? Well, specific names. We stay

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Speaker 1: away from the sectors that I would highlight. Uh cement

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Speaker 1: is one, clearly, Housing finance companies is another one. The

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Speaker 1: property developers, the property developing, The property developers sector in

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Speaker 1: India is very different than it was ten to fifteen

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Speaker 1: years ago. The sector has been cleaned up. Most of

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Speaker 1: the growth is concentrated within a very few leading companies.

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Speaker 1: We have exposure there. Again, if you look at companies

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Speaker 1: that are putting the pipes in houses, this shift from

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Speaker 1: metal pipes to plastic pipes, that is a very big

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Speaker 1: driver of growth at east of companies and paid companies,

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Speaker 1: UM companies that make consumer electronics, fans, washing machines, microwaves.

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Speaker 1: That is all very robust. If you look at the

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Speaker 1: on any reasonable time horizon, at any metric that you choose,

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Speaker 1: the penetration of finished housing and affordable housing in India

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Speaker 1: is very very low. That is going to take decades

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Speaker 1: to play out, and for investors not traders, I think

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Speaker 1: there are many opportunities. Still, what what is the policy

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Speaker 1: response right now for the RBI and team in terms

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Speaker 1: of trying to deal with it. Doesn't want to stifle growth,

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Speaker 1: I get that, but there is an inflation story that

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Speaker 1: has to be dealt with. There's an inflation story. I

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Speaker 1: think what what we are beginning with Actually, what we

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Speaker 1: have seen now for several months and a couple of

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Speaker 1: years is as India heads to the general elections, the

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Speaker 1: national elections in four we're going to see very steady

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Speaker 1: investment in infrastructure, in housing, and in commerce. And this

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Speaker 1: is a different India than what we have seen over

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Speaker 1: the past twenty thirty years. And it's it's very friendly

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Speaker 1: towards business. It is very strict and harsh on corruption

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Speaker 1: and uh. Also what is different is that we're not

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Speaker 1: seeing the same level of bill outs, handouts from the government,

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Speaker 1: the genuine long term investment. So I think that is

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Speaker 1: how they're they're battling inflation. It's long term investments and

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Speaker 1: it's paying dividends and it's not just in the very

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Speaker 1: few months left leading up to elections. As we've seen before.

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Speaker 1: This has been going on for a few years. Now.

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Speaker 1: I want to get to one of the other markets

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Speaker 1: that you've got to view about, and that is Japan.

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Speaker 1: I mean, we've just had some rather this week machine

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Speaker 1: till orders for the month of September, surprise contraction in

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Speaker 1: g d P yesterday. But you do say that this

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Speaker 1: time it is different in Japan. What what do you

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Speaker 1: mean by that? Yes, so it has been different for

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Speaker 1: a few years. So if you go back a decade

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Speaker 1: when Abbey's errors were first fired, uh and and the

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Speaker 1: focused on corporate governance to focus on cleaning up balance

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Speaker 1: sheets and growing through subtraction not addition, so not through

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Speaker 1: the conglomerate model which we are seeing going back to

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Speaker 1: the seventies and eighties, but but by being very thoughtful

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Speaker 1: and focusing on revenue growth and operating leverage and less

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Speaker 1: cash on the balance sheet. And so that we see

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Speaker 1: across sectors in Japan one area if we are very

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Speaker 1: excited about what we see in the small cap space

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Speaker 1: in Japan. We we see opportunities here that will, like

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Speaker 1: in India, take three, five, ten years to play out,

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Speaker 1: but these are going to be very high compounding growth

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Speaker 1: companies for a long time, and there are more opportunities

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Speaker 1: that we can go through at the moment. All Right,

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Speaker 1: Vicus Shod, portfolio manager Asian Equities at M and G Investments,

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Speaker 1: were out of time, but thanks so much for joining

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Speaker 1: us today on the Bloomberg Daybreak Asia