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Speaker 1: Let's get to our guest, James Chio, Southeast Asia, c

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Speaker 1: i O at HSBC Global Private Banking and Wealth. James,

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Speaker 1: the US bond market seems to be suggesting recession, whereas

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Speaker 1: the stock market seems to be predicting some kind of

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Speaker 1: soft landing. I suppose, so maybe we looked to the

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Speaker 1: dollar for some early indicator activity. It's been dropping over

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Speaker 1: the past couple of days. What is it trying to

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Speaker 1: tell us? Well, I think at this point we are

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Speaker 1: kind of at an inflection point in which markets are

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Speaker 1: paying more attention to chances of possibly appending pivot from

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Speaker 1: central banks. I think, firstly to slower the pace of

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Speaker 1: tightening than perhaps to pause and perhaps possibly re cuts

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Speaker 1: about all these things a period of time. And of

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Speaker 1: course how how the process of how these sequence of

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Speaker 1: central bank activity playing out really depends on the economic

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Speaker 1: data outcome. So I think we are at the inflection point. Uh.

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Speaker 1: And of course that's how the board markets, actually markets

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Speaker 1: and of course currency markets are reacting to it. We're

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Speaker 1: looking to the end of the year, we're looking to

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Speaker 1: the US mid term elections. You're saying you are reducing

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Speaker 1: the extent of your overweight in US equities Why is

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Speaker 1: that because we often do see, of course, a little

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Speaker 1: bit of a trading term in terms of what markets

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Speaker 1: do in terms of these elections are historically good for stocks. Yeah, well,

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Speaker 1: there there are historical relations with with mid term elections

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Speaker 1: which tend to be slightly positive. But I think it's

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Speaker 1: very hard to kind of based on that, uh and

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Speaker 1: expect a similar kind of outcome. We are looking at

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Speaker 1: fundamentals and we while we still hold and avoid the

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Speaker 1: US equities, we are trimming exposure, taking profit really as

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Speaker 1: we expect earnings to start to kind of uh platrol

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Speaker 1: and starts to slow down. And I think the fundamental picture,

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Speaker 1: especially with global growth s going now, doesn't exactly wealth

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Speaker 1: for for earnings. So I think we just want to

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Speaker 1: on the side of caution, and of course we think

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Speaker 1: that there could be quite uncertainty going forward. We've seen

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Speaker 1: a rally in Asian stocks of late after under performance

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Speaker 1: versus the SMP five d well that's tied to the

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Speaker 1: possible reopening in China, that that reopening seems aspirational in

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Speaker 1: nature rather than based in fact. Uh. So, you know,

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Speaker 1: I wonder whether or not is there a way to

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Speaker 1: to figure out exactly what what comes next in Asian markets? Well,

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Speaker 1: I think it's very difficult. But I think if you

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Speaker 1: look at the growth outlook and mean and China it

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Speaker 1: means very uncertain. You have to look at the economic data.

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Speaker 1: The leaders set of p M MICE reflect downside risk,

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Speaker 1: especially from the property market and clearly UH COVID restrictions,

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Speaker 1: how to predict, how to tell when it will You're

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Speaker 1: talking about the challenges and the gloomy outlook for for China,

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Speaker 1: But when it comes to the equity market, I mean

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Speaker 1: when you look at technicals, that does look like there

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Speaker 1: is more upside coming through there. At one point, we

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Speaker 1: do know that they are going to move away from

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Speaker 1: those COVID zero policies, even though authorities have been saying

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Speaker 1: they are unswervingly committed to them. You kind of don't

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Speaker 1: want to be behind this trade. Where would you be

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Speaker 1: looking for further upside here? Yeah, well, I think there

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Speaker 1: are pockets of relatively strength in Asia. So of course

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Speaker 1: tourism reopening effects on some of the Asian economies can

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Speaker 1: actually cause activity to grind higher, and of course if

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Speaker 1: you combine that with currency weakness, you might get some

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Speaker 1: uplift UH and support at least for some Asian economies.

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Speaker 1: So where we think opportunities are largely in parts of

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Speaker 1: Southeast Asia such as Indonesia and of course uh in

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Speaker 1: Thailand that could actually benefit from domestic consumption but also

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Speaker 1: the reopening trade. And we have sort of a preference

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Speaker 1: for Southeast Asia over North Asia. Mm hmm. Interesting. You

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Speaker 1: deal with a lot of high net worth individuals, so

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Speaker 1: I'm curious whether or not right now they seem opportunistic

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Speaker 1: or conscious. Well, I think it's a it's a mixed back.

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Speaker 1: There will be those who have taken a profit earlier

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Speaker 1: earlier on and and we're on the sidelines and waiting

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Speaker 1: on the side lines with cash looking for opportunities. So

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Speaker 1: for those I think they are uh, looking out for

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Speaker 1: opportunities now. But of course there will be those that

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Speaker 1: did not take profit as fast and of course are

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Speaker 1: much more affected by the cell of in in both

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Speaker 1: equities and boards. So I think it's a mixed back.

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Speaker 1: And of course generally, uh, the sentiment really it's on

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Speaker 1: on the whole. Uh, it's still extremely uh dependent on

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Speaker 1: how the trajectory of markets will be, which is quite

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Speaker 1: uncertain as of now. Yeah, it is uncertain, And we

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Speaker 1: mentioned the dollar strength there to what particularly do you

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Speaker 1: like then in Southeast Asia, Well, I think in subas Asia,

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Speaker 1: we think the opportunities are it's largely in Indonesian equities,

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Speaker 1: eating that some of the bank's consumer staples UH stocks

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Speaker 1: associated with UH infrastructure looks quite interesting with the current

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Speaker 1: strength of the economy. UH. But also I think we

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Speaker 1: think opportunities in Thailand UH It's can also benefit from

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Speaker 1: the rebounding global tourism, especially with the reopening place that's ongoing.

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Speaker 1: So there are pockets of strength. There are still opportunities

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Speaker 1: in this generally gloomy global outlook. But I think UH,

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Speaker 1: some of these countries can still grow quite strongly. UH.

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Speaker 1: In twenty twenty three, we've seen that there's a lot

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Speaker 1: of pend up energy for sure. I mean the China

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Speaker 1: opening story is a good example of that. You know,

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Speaker 1: they just hinted at it and then boom uh And

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Speaker 1: actually they didn't even really hint at it so much.

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Speaker 1: It was just social media with the higher interest rates. Know,

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Speaker 1: when we get a turn there, do you feel as

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Speaker 1: though inflation will drop quickly or that it will be

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Speaker 1: sticky and so even if we get a term, we

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Speaker 1: just don't get see you know, rates go any lower,

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Speaker 1: that's going to be quite a difficult call. I it

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Speaker 1: might not be as smooth, or it might not drop

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Speaker 1: as fast as mostly things really because the core inflation

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Speaker 1: it's still very much um sticky in many aspects, whether

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Speaker 1: it's wages, rents, and it takes a while before all

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Speaker 1: these starts to bite into the actual pm my uh data.

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Speaker 1: So of course you do get uncertainty such as what's

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Speaker 1: going to happen with China that could have effects on

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Speaker 1: commodity markets. So I think clearly it might not be

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Speaker 1: a kind of a very direct uh drop in inflation

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Speaker 1: into tween two in three. You might get a bumpy right,

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Speaker 1: with quite a bit of uncertainty, uh in the minds

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Speaker 1: of it all right, James, thanks for your time. James

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Speaker 1: t O with Southeast Asia c I O at h

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Speaker 1: s b C Global Private Banking and Wealth