WEBVTT - Herald van der Linde on the Markets (Radio)

0:00:00.160 --> 0:00:03.360
<v Speaker 1>Let's get back to Harold von der Linda from HSBC. Harold,

0:00:03.520 --> 0:00:05.480
<v Speaker 1>you were cut off there. I want you to continue

0:00:05.559 --> 0:00:07.640
<v Speaker 1>with your train of thought. Yeah, thanks a lot, we

0:00:07.640 --> 0:00:10.600
<v Speaker 1>get cut off. Yes, So what is important for the

0:00:10.600 --> 0:00:13.240
<v Speaker 1>Asian equity market is the outlook for inflation in the US.

0:00:13.400 --> 0:00:16.079
<v Speaker 1>And these are just signs people have always stopped. They

0:00:16.079 --> 0:00:19.079
<v Speaker 1>couldn't get their products, say six months ago, they needed

0:00:19.120 --> 0:00:21.360
<v Speaker 1>to make sure that they had stuck up in inventory.

0:00:21.680 --> 0:00:24.279
<v Speaker 1>Now demands maybe a little bit weaker than anticipated, and

0:00:24.320 --> 0:00:27.600
<v Speaker 1>they're cutting prices and that's yeah, that means that maybe

0:00:27.680 --> 0:00:30.600
<v Speaker 1>the inflationary story is is is a little bit on

0:00:30.640 --> 0:00:33.400
<v Speaker 1>his back lacks yet, So let's see how that impacts

0:00:33.400 --> 0:00:36.320
<v Speaker 1>over inflation numbers. But that is important for US in

0:00:36.640 --> 0:00:39.559
<v Speaker 1>Asia because lower inflation in lower bonds uts and lower

0:00:39.560 --> 0:00:43.160
<v Speaker 1>bund juts, that's good for Asian equities. Very quickly, Harold,

0:00:43.200 --> 0:00:45.440
<v Speaker 1>what does it tell us about the consumer twenty seconds?

0:00:46.520 --> 0:00:48.520
<v Speaker 1>What does it tell us about the consumer in twenty

0:00:48.520 --> 0:00:52.000
<v Speaker 1>seconds is that the outlook maybe for consumption demand is

0:00:52.040 --> 0:00:53.840
<v Speaker 1>not as strong as what we anticipate. And this is

0:00:53.880 --> 0:00:56.400
<v Speaker 1>important for Asians well because we help, of course a

0:00:56.440 --> 0:00:59.120
<v Speaker 1>whole bunch of exporters in the region, particularly in Korea

0:00:59.160 --> 0:01:04.080
<v Speaker 1>and Taiwan tech exporters, and yeah, maybe the outlook for

0:01:04.200 --> 0:01:06.080
<v Speaker 1>them is a little bit we we've already seen that,

0:01:06.200 --> 0:01:09.280
<v Speaker 1>which is in that particular secrecy earning being cut in

0:01:09.400 --> 0:01:13.199
<v Speaker 1>that monthly sales momentum that comes through in Taiwan being

0:01:13.560 --> 0:01:17.440
<v Speaker 1>quite weak guidance from company. And Harold, you did mention

0:01:17.880 --> 0:01:21.000
<v Speaker 1>when we were speaking earlier about opportunities in Asia. I know,

0:01:21.520 --> 0:01:25.400
<v Speaker 1>Asia Tech, you identify some very attractive pe ratios. At

0:01:25.400 --> 0:01:29.039
<v Speaker 1>the moment, are you adding to your positions then no,

0:01:29.240 --> 0:01:32.520
<v Speaker 1>not yet. The evaluations are low for that sector. Asia

0:01:32.560 --> 0:01:35.560
<v Speaker 1>Tech is down on something like third excent. But the

0:01:35.640 --> 0:01:37.600
<v Speaker 1>problem is to sell through. I mean, you guys just

0:01:37.600 --> 0:01:43.720
<v Speaker 1>spoke about Lamart the discounting products. Uh, the demands might

0:01:43.760 --> 0:01:46.120
<v Speaker 1>be weaker in for for that products, So that's going

0:01:46.160 --> 0:01:47.520
<v Speaker 1>to be a bit of an issue. So you're gonna

0:01:47.520 --> 0:01:50.040
<v Speaker 1>be highly selected in that sector, I think. And Brian

0:01:50.120 --> 0:01:54.360
<v Speaker 1>highlighted the fact that second quarter GDP and South Korea

0:01:54.520 --> 0:01:58.840
<v Speaker 1>much above forecast, nearly double what economists were expecting, a

0:01:58.920 --> 0:02:01.280
<v Speaker 1>gain of seven ns of one percent. It looks like

0:02:01.720 --> 0:02:04.360
<v Speaker 1>spending not only from households but the government as well,

0:02:04.760 --> 0:02:07.400
<v Speaker 1>helped to turn things around. I mean, do you have

0:02:07.400 --> 0:02:12.880
<v Speaker 1>any reaction to this? Yeah, I mean that's good for Korea.

0:02:14.760 --> 0:02:16.760
<v Speaker 1>I mean, I think part of it is also post

0:02:16.840 --> 0:02:19.960
<v Speaker 1>co fee a little bit kind of a church from

0:02:20.560 --> 0:02:23.720
<v Speaker 1>his activity comes back most to post code in South Korea.

0:02:24.639 --> 0:02:27.680
<v Speaker 1>But for the bigger tech companies in in Korea, that

0:02:28.000 --> 0:02:30.160
<v Speaker 1>is not overly relevant, to be honest, because it takes

0:02:30.160 --> 0:02:32.320
<v Speaker 1>so most of the products in Europe and in the US,

0:02:32.400 --> 0:02:35.680
<v Speaker 1>So it's what happens in those markets that's that's sort

0:02:35.680 --> 0:02:38.440
<v Speaker 1>of really important to them. Yeah, we do talk a

0:02:38.440 --> 0:02:42.160
<v Speaker 1>lot about recession risk, mostly though pertaining to the US

0:02:42.240 --> 0:02:44.280
<v Speaker 1>and and knock on risks for the rest of the world.

0:02:44.360 --> 0:02:46.960
<v Speaker 1>But but what about that risk when viewed through the

0:02:46.960 --> 0:02:49.000
<v Speaker 1>Asia Pacific lens. You know, we we just didn't have

0:02:49.040 --> 0:02:51.840
<v Speaker 1>that decent GDP read out of South Korea. Are the

0:02:51.960 --> 0:02:55.160
<v Speaker 1>probabilities different for this part of the world. Yeah, I

0:02:55.200 --> 0:02:57.320
<v Speaker 1>think an age the inflation store is a bit different.

0:02:57.400 --> 0:02:58.840
<v Speaker 1>It's a bit more mixed, to be honest. We have,

0:02:58.919 --> 0:03:02.960
<v Speaker 1>on the one hand, probably deflation the precious and issues

0:03:03.080 --> 0:03:06.919
<v Speaker 1>in in China. No, you're not mecessarily deflation, but the inflation.

0:03:07.240 --> 0:03:10.080
<v Speaker 1>Inflation is basically not a big issue in in China

0:03:10.160 --> 0:03:12.679
<v Speaker 1>because amount is weak and they're trying to actually move

0:03:12.760 --> 0:03:15.440
<v Speaker 1>it and getting a little bit getting people to buy

0:03:15.480 --> 0:03:18.440
<v Speaker 1>again and get confidence back again. Um. And then you

0:03:18.480 --> 0:03:22.560
<v Speaker 1>have important food inflation in markets such as India and

0:03:22.639 --> 0:03:26.040
<v Speaker 1>in Indonesia. The good news is that rice prices haven't

0:03:26.040 --> 0:03:28.519
<v Speaker 1>really increased that much and that some of the key

0:03:28.520 --> 0:03:32.520
<v Speaker 1>commodity prices are oil, copper, but also reach de prices

0:03:32.520 --> 0:03:34.760
<v Speaker 1>have come down, so that that helps the region a

0:03:34.800 --> 0:03:37.360
<v Speaker 1>little bit. But we still have to deal in particularly

0:03:37.360 --> 0:03:39.880
<v Speaker 1>that part of Asian institure with food inflation in the

0:03:39.880 --> 0:03:42.040
<v Speaker 1>second half of the year. Well, you mentioned energy. Their

0:03:42.040 --> 0:03:44.600
<v Speaker 1>crude oil prices today in New York were up quite

0:03:44.600 --> 0:03:46.800
<v Speaker 1>a bit where rose more than two percent and stale.

0:03:46.800 --> 0:03:50.040
<v Speaker 1>We're fluctuating very near hundred dollars of barrel and w

0:03:50.240 --> 0:03:52.120
<v Speaker 1>t I. At some point this is going to it.

0:03:52.240 --> 0:03:55.400
<v Speaker 1>It hasn't already began to buy it across many economies

0:03:55.400 --> 0:03:59.360
<v Speaker 1>in the APAC region. Yeah. Absolutely, And and the one

0:03:59.400 --> 0:04:01.560
<v Speaker 1>that is most stiff to this is India. There is

0:04:01.600 --> 0:04:06.640
<v Speaker 1>a large importer of oil and uh normally uh yeah,

0:04:06.680 --> 0:04:09.000
<v Speaker 1>if other prices are above eighty dollars or so, and

0:04:09.040 --> 0:04:12.120
<v Speaker 1>that it's well above it now. That's really a bit

0:04:12.120 --> 0:04:15.000
<v Speaker 1>of an issue for for India. So there's more slow

0:04:15.080 --> 0:04:18.520
<v Speaker 1>India to a certain extent. And yeah, that means also

0:04:18.640 --> 0:04:23.159
<v Speaker 1>you get that important inflation in in countries such as India. Um,

0:04:23.240 --> 0:04:25.000
<v Speaker 1>so that's that's gonna be a bit of an issue.

0:04:25.000 --> 0:04:27.120
<v Speaker 1>And we see already there that they want to typen

0:04:28.200 --> 0:04:29.480
<v Speaker 1>in the needs. You might have to do this as

0:04:29.480 --> 0:04:31.640
<v Speaker 1>well second half the year. That's more to related foot

0:04:31.920 --> 0:04:34.560
<v Speaker 1>not so much as oil. But yeah, that means that

0:04:34.640 --> 0:04:36.560
<v Speaker 1>in that part of Asia, the central banks might have

0:04:36.560 --> 0:04:39.000
<v Speaker 1>to typen. And that's probably on the margin not so

0:04:39.080 --> 0:04:42.479
<v Speaker 1>good for those equity markets there. So what assets around

0:04:42.480 --> 0:04:44.719
<v Speaker 1>the regional flashing a buy signal for you? Right now?

0:04:46.880 --> 0:04:50.880
<v Speaker 1>I think the buy signals are very clear. I think

0:04:50.920 --> 0:04:54.880
<v Speaker 1>in China, Um, it looks like things are turning slowly

0:04:54.920 --> 0:04:58.160
<v Speaker 1>around in China. There are certain sectors where the outlook

0:04:58.240 --> 0:05:00.080
<v Speaker 1>is starting to improve a little bit of the me

0:05:00.440 --> 0:05:03.040
<v Speaker 1>from a very low base. So UM, I think another

0:05:03.560 --> 0:05:06.520
<v Speaker 1>market people should be looking at this Thailand as as

0:05:06.680 --> 0:05:09.680
<v Speaker 1>the world opens up again. Um, Thailand is going to

0:05:09.760 --> 0:05:13.120
<v Speaker 1>be better as a tourist destination. Tourist numbers have dropped off,

0:05:13.160 --> 0:05:16.520
<v Speaker 1>like even if they come back a little bit, there's

0:05:16.520 --> 0:05:18.280
<v Speaker 1>going to be quite a good impact for for for

0:05:18.680 --> 0:05:22.440
<v Speaker 1>four Thai companies. So those are two markets I would

0:05:22.480 --> 0:05:26.400
<v Speaker 1>really take a look at all right, Harold Vanderlynd, head

0:05:26.440 --> 0:05:29.880
<v Speaker 1>of APEX Equity Strategy at HSBC, We will leave it there.

0:05:29.880 --> 0:05:32.479
<v Speaker 1>Thanks so much for joining us on Bloomberg at Daybreak

0:05:32.520 --> 0:05:32.839
<v Speaker 1>Asia