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Speaker 1: Let's get to our guess now. Thomas Pollowork as head

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Speaker 1: of Asia Multi Asset Solutions, a pack at tro Price,

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Speaker 1: joining us on the line from Singapore. Tom's always great

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Speaker 1: to talk to you. I mean, we are looking at

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Speaker 1: these increasing chances of a global recession. The UK TERMOL

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Speaker 1: as we heard earlier from the FEDS, Raphael Bostick not helping,

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Speaker 1: and as Brian mentioned this Ned David's research. Seeing a

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Speaker 1: ninety eight percent chance of a looming global recession, it

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Speaker 1: kind of begs the question of how deep this is

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Speaker 1: going to be and how do you hide here? Yeah, sure,

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Speaker 1: good morning and do it. So I look on the

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Speaker 1: recession risk. It's true that if you look at certain

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Speaker 1: you getos like the p m I market returns as

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Speaker 1: well as a yield curve. You get to that ninety

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Speaker 1: percent probability authorization. But then if you throw in the

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Speaker 1: labor market and the low level of leverage that we

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Speaker 1: see globally, you get the probability that is um that

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Speaker 1: is much lower. So I guess we we can be

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Speaker 1: negative given what is going on market and the level

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Speaker 1: of volatility, And definitely we have been positioned conservatively in

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Speaker 1: our portfolio, but we have also to to keep in

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Speaker 1: mind that there are some green aspects of the economy

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Speaker 1: with the labor market and the low level of leverage.

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Speaker 1: So it's UM it's something that we are monitoring closely.

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Speaker 1: UM still volatile market, still being defensive, but we also

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Speaker 1: play offense with some part of our part for your

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Speaker 1: through emerging market for example or high field. One of

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Speaker 1: the hedge fund managers that we interviewed at Bloomberg and

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Speaker 1: Bernard from wind Cresses, I don't think it's time to

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Speaker 1: be a hero. Just want to survivor year and end

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Speaker 1: up in that case, you see more allocation towards cash,

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Speaker 1: towards safe havens UM. Look. Safe havens have been hard

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Speaker 1: to find this year, definitely, so it has been more

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Speaker 1: about protecting assets through UM dynamic future based strategies or

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Speaker 1: using cash. As you said, we have a limited amount

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Speaker 1: of cash these days. We try to make that cash

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Speaker 1: work harder by investing into a high yield which is

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Speaker 1: typically well placed in in the early stage of recovery.

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Speaker 1: Given the low level of leverage that I mentioned before.

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Speaker 1: So UM that's a way to uh to allocate your

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Speaker 1: cash and take a bit more risk, for sure, but

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Speaker 1: also to to have a higher yields for income investor

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Speaker 1: that can be attractive. We can see also that some

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Speaker 1: of the markets, especially in the emerging market and in

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Speaker 1: Asia UM, the worst has been priced in already, so

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Speaker 1: it's difficult to see earnings revision going even lower. It's

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Speaker 1: difficult also to imagine central banks tightening more. In fact,

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Speaker 1: most of the central vaccine Asia are considering easy. So

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Speaker 1: we see that there are pockets of opportunity here and there,

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Speaker 1: but at a at a high level, we agree that

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Speaker 1: it is not the time to be a hero, and

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Speaker 1: we have a conservative allocation until now. So we are

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Speaker 1: monitoring how markets are going down and there will be

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Speaker 1: a time where you have to start by. When it

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Speaker 1: comes to the Asia picture, though, I mean King dollar

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Speaker 1: very much breaking havoc with all of these currencies fall

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Speaker 1: into multi or record lows, are you worried that we

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Speaker 1: could say a similar scenario to what we saw in

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Speaker 1: n UM. Not a base case, but definitely the pace

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Speaker 1: of appreciation is is something to keep an eye on.

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Speaker 1: We it's hard to take any view on the on

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Speaker 1: the currencies right now except this long dollar that has

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Speaker 1: been king for the past month. I have to say

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Speaker 1: that what is keys to monitor the volatility of the

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Speaker 1: rate market. Um defining and estimating what would be the

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Speaker 1: terminal rates of central banks is what the market is

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Speaker 1: gruppling with. So looking at an indicator like the move

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Speaker 1: index is something to watch for together, so direction on

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Speaker 1: the on the currency market, we're talking about king dollar

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Speaker 1: and the crisis level potentially amongst Asian currencies. When it

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Speaker 1: comes to you one that plungineer of fourteen year low,

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Speaker 1: how much more pushback do you expect from the PBOC. Look,

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Speaker 1: the p BOC is not trying to reverse the trend

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Speaker 1: from a depreciation to an appreciation. I think what the

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Speaker 1: PBOs is concerned about is the pace of depreciation. So

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Speaker 1: that's what they have been trying to do to come

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Speaker 1: up with some rules that are preventing more outflows from

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Speaker 1: the countries. So monitoring the base of depreciation. But if

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Speaker 1: you look at the UN not versus versus the trade

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Speaker 1: weighted index, the un has been pretty flat or even stronger.

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Speaker 1: So I guess what they're trying to to monitor the

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Speaker 1: competitiveness and a depreciation is expected going forward. When it

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Speaker 1: comes to the overall China story, we are expecting those

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Speaker 1: pms to continue to show further weakness as we have

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Speaker 1: changed do the lifting it's a lockdown, is a hope

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Speaker 1: for growth stabilization, And I guess what kind of positive

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Speaker 1: momentum are we expecting to see if we do see

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Speaker 1: an easing from COVID zero after the Party Congress. Look,

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Speaker 1: the consensus on the easing of the dynamics era dynamic

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Speaker 1: or COVID policy is more looking at a Q two

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Speaker 1: twenties three now, um, so I'm not expecting any lift

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Speaker 1: or any positive surprise after the Party Congress. But yeah,

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Speaker 1: I guess the mood and the expectations are already pretty

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Speaker 1: dire when looking at China. So it's um, it's more

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Speaker 1: what is priced in and whether if you look at

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Speaker 1: six to twelve months going forward, things will be improving

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Speaker 1: in China. And that's what we are looking at, is

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Speaker 1: the improvement from the current situation is very likely, especially

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Speaker 1: if you have a twelve months horizon, and that's why

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Speaker 1: we have been quite modestly positive on Chinese set looking

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Speaker 1: at an improvement in earnings, looking at especially in sectors

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Speaker 1: like electric vehicles, the green transition and also the automation

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Speaker 1: in that tractoring. You say, more broadly, a lot of

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Speaker 1: the bad news has been priced in in Asia? Where

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Speaker 1: are you looking for further upside? We talked to a

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Speaker 1: lot of people who are looking at the likes of Thailand,

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Speaker 1: India day on your radar too. They are, But I

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Speaker 1: guess the upside from now is um perhaps limited. Although

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Speaker 1: we were still favoring Southeast Asia versus North Asia. Um,

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Speaker 1: we are still in a way living in the in

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Speaker 1: the post COVID distortion world, and Taiwan and Korea, for example,

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Speaker 1: where big beneficiaries of this buying of goods that we

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Speaker 1: saw during COVID, So they are perhaps going forward struggling

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Speaker 1: more than the Southeast Asia where they are benefiting from

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Speaker 1: the reopening and the services. But the reopening is is

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Speaker 1: quite gradual and till we see China being able to

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Speaker 1: reopen their borders the tourism tourism industry, we're not really

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Speaker 1: being a big lift for Thailand, for example, So maybe

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Speaker 1: waiting a couple of months to make a big bets

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Speaker 1: on Thailand and Southeast Asia will be how we we

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Speaker 1: position there. So for now we are quite broadly invested

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Speaker 1: into it. Okay. One one reopening story that we're all

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Speaker 1: excited about is Japan, and then you've got that very

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Speaker 1: weak yend to which bodes well for Japanese equities. Tell

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Speaker 1: us a little more as to why you're overweight overweight

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Speaker 1: Japanese stocks. Yeah, that's something we discussed very recently, so Um,

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Speaker 1: as you said that the week yen at some stage

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Speaker 1: starts to become a tail wind for the exporters, and

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Speaker 1: at the same time we see commodity prices going down

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Speaker 1: because of the expectation of a weak economic growth environment.

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Speaker 1: So um, this could be really a very unique situation

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Speaker 1: in this world right now where Japan has still accommodative

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Speaker 1: policy um, still a very weak currency UM, lower commodity prices,

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Speaker 1: and typically this bud's well for Japanese companies to do

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Speaker 1: well in jam Alright, So overweight Japanese stocks, overweight high

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Speaker 1: yield Thomas, We thank you as always for your insights.

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Speaker 1: Thomas Poloak is head of multi asset Solutions at t ROW.

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Speaker 1: Price on the line for US from Singapore here on

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Speaker 1: Bloomberg Debreak Asia