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Speaker 1: Let's get to our guests in Hong Kong. He is

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Speaker 1: Ken Wong, Asian equity portfolio specialist at east Spring Investments. Ken,

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Speaker 1: thanks for being with us. We're gonna get trading on

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Speaker 1: the mainland at the bottom of the hour as well.

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Speaker 1: UM obviously in Hong Kong too. But I was looking

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Speaker 1: at the c s I three over the prior four

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Speaker 1: trading days, enormous volatility. We ended the day yesterday very

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Speaker 1: little changed relative to where we began the week. Help

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Speaker 1: me understand the volatility what's happening on mainland markets right

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Speaker 1: now that that would really justify these enormous moves and

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Speaker 1: equity prices. Yeah, I don't forget. We had UM specifically

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Speaker 1: an interest rate reduction earlier this week, so markets were

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Speaker 1: contemplating specifically, you know, so UM, you know sort of

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Speaker 1: how that would have an impact. And then when they

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Speaker 1: start to realize that, you know that tempest basis points

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Speaker 1: deduction UM or reduction is not going to be enough

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Speaker 1: that they reacted in other ways. But then obviously, you know,

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Speaker 1: you've had presidential thing also coming out UM talking about

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Speaker 1: how's specific provisional governments needs to do more. We're seeing potential,

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Speaker 1: you know, further debt issuances from provisional government. So there's

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Speaker 1: been a lot of noise and market movements this week

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Speaker 1: in regards to a lot of actions as being undertaken

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Speaker 1: by the government and a lot of downgrades for China's

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Speaker 1: economic growth, which I guess just adds to that thought

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Speaker 1: that you will see more stimulus coming through when it

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Speaker 1: comes to what we could see in the interim. I mean,

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Speaker 1: you're expecting the LPRs to be cut next week too, Yeah,

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Speaker 1: we do expect that to happen with that tent Basinis

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Speaker 1: points as well. You know, we reduce our forecast for

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Speaker 1: the year as well too, roughly about three to four

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Speaker 1: percent when it comes to economic growth. But you know,

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Speaker 1: we're still definitely monitoring situation closely because ultimately, you know,

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Speaker 1: with what we've seen from monetary policies, more fiscal policies

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Speaker 1: and potentially um a loosening of you know, further crackdowns

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Speaker 1: and regulations, potentially you know, that could pave the way.

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Speaker 1: But ultimately, you know, when we look at what's been

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Speaker 1: affecting an impact in the Chinese economy so far, it's

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Speaker 1: been property and also from the COVID policies, which has

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Speaker 1: really affected consumption. And the week began Monday Beijing time

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Speaker 1: with the report on very very weak credit growth. UM

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Speaker 1: checked that that was at the end of last week.

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Speaker 1: I get my days confused sometimes because I'm here in

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Speaker 1: New York. You're in Hong Kong. You understand, right, But

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Speaker 1: I think, right particularly on a Friday Thursday here in

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Speaker 1: New York, you see what I mean. UM. The problem though,

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Speaker 1: I think that we have to look at when we're

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Speaker 1: talking about the markets, is this idea that there is

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Speaker 1: so much liquidity still in the system. Is China in

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Speaker 1: a liquidity trap? Um? Not really. The fact is is

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Speaker 1: that right now what needs to happen is that there

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Speaker 1: needs to be a bit more demand when it comes

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Speaker 1: to uh, you know, sort of total social finance financing

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Speaker 1: UM specifically, just more of the demand for credit UM.

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Speaker 1: At the moment, because of weakening economic figures UM, it

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Speaker 1: has the turd whether it be a corporations and individuals

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Speaker 1: to you know, trying to get more credit. But overall,

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Speaker 1: when you look at earnings and when we look at

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Speaker 1: a lot of domestic A share companies, the fact is

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Speaker 1: that first half earnings is looking you know, fairly solid

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Speaker 1: right now. You know, the fact is is that, you know,

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Speaker 1: we're still seeing fairly robust earnings growth, especially from new

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Speaker 1: economy stocks, uh, you know, across the board. So you know,

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Speaker 1: there is definitely some positives when it comes to you know,

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Speaker 1: corporations and the companies themselves and seeing you pretty modest

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Speaker 1: earnings growth to share. So we mentioned we wanted to

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Speaker 1: get your thoughts somewhere to allocate capital. We were speaking

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Speaker 1: at Bloomberg to the CEO of the luggage maker Samson International,

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Speaker 1: and he says, the real hold back for China unleashing

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Speaker 1: will be international travel, which is still down. I'm guessing

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Speaker 1: that reopening theme is a potential positive one. What are

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Speaker 1: you looking at in terms of when we finally see

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Speaker 1: the consumer in China able to spend outside China. Yeah,

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Speaker 1: that's going to be a very important aspect as well.

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Speaker 1: Um And again, you know, even domestically within China, we

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Speaker 1: would like to see consumption picked up. But the fact

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Speaker 1: is is that, you know, because of some of the

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Speaker 1: COVID policies that's really been impacting on overall consumers spend,

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Speaker 1: and because the fact that you know, overall GDP figures

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Speaker 1: haven't been as strong as anticipated. It's really kind of

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Speaker 1: delayed and pushed back some of the spend that some

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Speaker 1: consumers would have. But you know, we are we are

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Speaker 1: seeing you know, signs over somewhere that domestic traveling you know,

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Speaker 1: has picked up within China, and we are definitely you know,

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Speaker 1: seeing some pick ups of consumptions. Um. You know, despite

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Speaker 1: the fact that we have fairly weak economic figures in

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Speaker 1: July coming in from China, overall consumption numbers tends to

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Speaker 1: be uh or still is actually trending in the right

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Speaker 1: direction over the past couple of months. So this is

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Speaker 1: going to be important. So a lot of consuming espectionary

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Speaker 1: names are something will continue to look at because um

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Speaker 1: that potential of a further picked up in terms of consumptions.

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Speaker 1: So where are you with respect to things like technology

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Speaker 1: and you know, this kind of the the green revolution

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Speaker 1: that's happening right now that seems like it may be

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Speaker 1: a very crowded trade in China. Is that true? It

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Speaker 1: is to some ex But the fact is that within

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Speaker 1: the A shares there is a lot of stock selections

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Speaker 1: and choices. In particular, you know, when you look at

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Speaker 1: some of these names, like you mentioned earlier, within the

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Speaker 1: industrial sectors, you do have a lot of battery makers.

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Speaker 1: You do have a lot of renewables solar when a

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Speaker 1: lot of these companies which are really available, I mean

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Speaker 1: there's roughly about over a thousand A share companies right

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Speaker 1: now within the industrial side, so you know, when you

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Speaker 1: look at stock choices, there are definitely a lot of

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Speaker 1: choices for us when it comes to stock selections. We're

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Speaker 1: looking ahead to some big earnings. The likes of Petro

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Speaker 1: China Food Delivery may chue Bloomberg Intelligence forecasting Chinese companies

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Speaker 1: could be set to report the worst earnings performance in

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Speaker 1: two years, but we had ten centers will come through

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Speaker 1: with that first negative quarter of growth. What's your view

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Speaker 1: on on the earning season in terms of a broad

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Speaker 1: picture here, Yes, so far, if you look at earnings,

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Speaker 1: um U S, A d R S have seen quite

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Speaker 1: a bit of decline when it comes to uh first

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Speaker 1: half two earnings. But when you look at A shares

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Speaker 1: so far, the companies that's reported, they've actually reported fairly

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Speaker 1: robust numbers. If you look at first half tw two

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Speaker 1: growth on a year and year basis, with only the

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Speaker 1: companies reported, which has been less than so far, we've

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Speaker 1: seen rise a roughly about fourteen earnings growth for a

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Speaker 1: share companies, and so that is something to continue to

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Speaker 1: monitor because the fact is that, yes, while there's still

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Speaker 1: a lot of geo political tensions, uh you know, for

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Speaker 1: Hong Kong list of Chinese shares or specifically for US

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Speaker 1: list of Chinese shares, the fact is that when you

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Speaker 1: look at domestic Asian markets is we're still seeing fairly

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Speaker 1: robusts in solid earning scrowth. So we were talking about

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Speaker 1: the weakness in the property market. That's a well known story.

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Speaker 1: But when you look at the industries that are connected

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Speaker 1: with that, and I'm thinking of steel, I'm thinking of

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Speaker 1: other industrial and building components that feed into that. Is

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Speaker 1: this an area that new or areas plural that you

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Speaker 1: want to avoid at all costs at the moment you

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Speaker 1: you want to be a bit more careful and bit

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Speaker 1: more selective because overall, when you look at the property

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Speaker 1: sector as a whole, especially you know from a overall

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Speaker 1: market cap or from a you know, just even looking

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Speaker 1: at from X point of view, overall real estate exposures.

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Speaker 1: Now on the mainland, when you look at you know

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Speaker 1: specifically how much exposure they have a lot of a

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Speaker 1: lot of the indexes and a lot of funds hold

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Speaker 1: less than you know, one or two percent of their

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Speaker 1: portfolios within real estate. This is tnpically down from you know,

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Speaker 1: five six, just from you know five years ago. So

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Speaker 1: specifically you have seen already a lot less interest when

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Speaker 1: it comes to uh, you know, the property developers on

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Speaker 1: the equi side on a fixing COMPCIS is a little

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Speaker 1: bit different, but overall you have to be a lot

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Speaker 1: more selective, uh, specifically when it comes to the property

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Speaker 1: companies in China right now. Yeah, and just getting to

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Speaker 1: your call there as well, you're saying bottom fishing opportunities

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Speaker 1: in Asian bonds in particular Asia high year bonds where

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Speaker 1: evaluations are attractive. Can we thank you for your time

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Speaker 1: as always. Ken Wong, Asian equity portfolio specialist at a

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Speaker 1: Spring Investments on the line for us from Hong Kong

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Speaker 1: here on Bloomberg Daybreak Asia