Speaker 1: Let's get back to Harold von der Linda from HSBC. Harold,
Speaker 1: you were cut off there. I want you to continue
Speaker 1: with your train of thought. Yeah, thanks a lot, we
Speaker 1: get cut off. Yes, So what is important for the
Speaker 1: Asian equity market is the outlook for inflation in the US.
Speaker 1: And these are just signs people have always stopped. They
Speaker 1: couldn't get their products, say six months ago, they needed
Speaker 1: to make sure that they had stuck up in inventory.
Speaker 1: Now demands maybe a little bit weaker than anticipated, and
Speaker 1: they're cutting prices and that's yeah, that means that maybe
Speaker 1: the inflationary story is is is a little bit on
Speaker 1: his back lacks yet, So let's see how that impacts
Speaker 1: over inflation numbers. But that is important for US in
Speaker 1: Asia because lower inflation in lower bonds uts and lower
Speaker 1: bund juts, that's good for Asian equities. Very quickly, Harold,
Speaker 1: what does it tell us about the consumer twenty seconds?
Speaker 1: What does it tell us about the consumer in twenty
Speaker 1: seconds is that the outlook maybe for consumption demand is
Speaker 1: not as strong as what we anticipate. And this is
Speaker 1: important for Asians well because we help, of course a
Speaker 1: whole bunch of exporters in the region, particularly in Korea
Speaker 1: and Taiwan tech exporters, and yeah, maybe the outlook for
Speaker 1: them is a little bit we we've already seen that,
Speaker 1: which is in that particular secrecy earning being cut in
Speaker 1: that monthly sales momentum that comes through in Taiwan being
Speaker 1: quite weak guidance from company. And Harold, you did mention
Speaker 1: when we were speaking earlier about opportunities in Asia. I know,
Speaker 1: Asia Tech, you identify some very attractive pe ratios. At
Speaker 1: the moment, are you adding to your positions then no,
Speaker 1: not yet. The evaluations are low for that sector. Asia
Speaker 1: Tech is down on something like third excent. But the
Speaker 1: problem is to sell through. I mean, you guys just
Speaker 1: spoke about Lamart the discounting products. Uh, the demands might
Speaker 1: be weaker in for for that products, So that's going
Speaker 1: to be a bit of an issue. So you're gonna
Speaker 1: be highly selected in that sector, I think. And Brian
Speaker 1: highlighted the fact that second quarter GDP and South Korea
Speaker 1: much above forecast, nearly double what economists were expecting, a
Speaker 1: gain of seven ns of one percent. It looks like
Speaker 1: spending not only from households but the government as well,
Speaker 1: helped to turn things around. I mean, do you have
Speaker 1: any reaction to this? Yeah, I mean that's good for Korea.
Speaker 1: I mean, I think part of it is also post
Speaker 1: co fee a little bit kind of a church from
Speaker 1: his activity comes back most to post code in South Korea.
Speaker 1: But for the bigger tech companies in in Korea, that
Speaker 1: is not overly relevant, to be honest, because it takes
Speaker 1: so most of the products in Europe and in the US,
Speaker 1: So it's what happens in those markets that's that's sort
Speaker 1: of really important to them. Yeah, we do talk a
Speaker 1: lot about recession risk, mostly though pertaining to the US
Speaker 1: and and knock on risks for the rest of the world.
Speaker 1: But but what about that risk when viewed through the
Speaker 1: Asia Pacific lens. You know, we we just didn't have
Speaker 1: that decent GDP read out of South Korea. Are the
Speaker 1: probabilities different for this part of the world. Yeah, I
Speaker 1: think an age the inflation store is a bit different.
Speaker 1: It's a bit more mixed, to be honest. We have,
Speaker 1: on the one hand, probably deflation the precious and issues
Speaker 1: in in China. No, you're not mecessarily deflation, but the inflation.
Speaker 1: Inflation is basically not a big issue in in China
Speaker 1: because amount is weak and they're trying to actually move
Speaker 1: it and getting a little bit getting people to buy
Speaker 1: again and get confidence back again. Um. And then you
Speaker 1: have important food inflation in markets such as India and
Speaker 1: in Indonesia. The good news is that rice prices haven't
Speaker 1: really increased that much and that some of the key
Speaker 1: commodity prices are oil, copper, but also reach de prices
Speaker 1: have come down, so that that helps the region a
Speaker 1: little bit. But we still have to deal in particularly
Speaker 1: that part of Asian institure with food inflation in the
Speaker 1: second half of the year. Well, you mentioned energy. Their
Speaker 1: crude oil prices today in New York were up quite
Speaker 1: a bit where rose more than two percent and stale.
Speaker 1: We're fluctuating very near hundred dollars of barrel and w
Speaker 1: t I. At some point this is going to it.
Speaker 1: It hasn't already began to buy it across many economies
Speaker 1: in the APAC region. Yeah. Absolutely, And and the one
Speaker 1: that is most stiff to this is India. There is
Speaker 1: a large importer of oil and uh normally uh yeah,
Speaker 1: if other prices are above eighty dollars or so, and
Speaker 1: that it's well above it now. That's really a bit
Speaker 1: of an issue for for India. So there's more slow
Speaker 1: India to a certain extent. And yeah, that means also
Speaker 1: you get that important inflation in in countries such as India. Um,
Speaker 1: so that's that's gonna be a bit of an issue.
Speaker 1: And we see already there that they want to typen
Speaker 1: in the needs. You might have to do this as
Speaker 1: well second half the year. That's more to related foot
Speaker 1: not so much as oil. But yeah, that means that
Speaker 1: in that part of Asia, the central banks might have
Speaker 1: to typen. And that's probably on the margin not so
Speaker 1: good for those equity markets there. So what assets around
Speaker 1: the regional flashing a buy signal for you? Right now?
Speaker 1: I think the buy signals are very clear. I think
Speaker 1: in China, Um, it looks like things are turning slowly
Speaker 1: around in China. There are certain sectors where the outlook
Speaker 1: is starting to improve a little bit of the me
Speaker 1: from a very low base. So UM, I think another
Speaker 1: market people should be looking at this Thailand as as
Speaker 1: the world opens up again. Um, Thailand is going to
Speaker 1: be better as a tourist destination. Tourist numbers have dropped off,
Speaker 1: like even if they come back a little bit, there's
Speaker 1: going to be quite a good impact for for for
Speaker 1: four Thai companies. So those are two markets I would
Speaker 1: really take a look at all right, Harold Vanderlynd, head
Speaker 1: of APEX Equity Strategy at HSBC, We will leave it there.
Speaker 1: Thanks so much for joining us on Bloomberg at Daybreak
Speaker 1: Asia