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Speaker 1: At the time here is about seven and a half

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Speaker 1: minutes past. Then let's get to Wendy, you chief Asia

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Speaker 1: and China equity strategists at JP Morgan. Wendy, nice to

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Speaker 1: have you with us. So a bad year for risk

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Speaker 1: assets just got a whole lot worse. What do you

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Speaker 1: do here? UM? You know, dollars very strong as a

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Speaker 1: sign of tightening dollar liquidity, and our analysis shows that

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Speaker 1: every two percent move higher and the d X Y

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Speaker 1: you have equities foul by around four percent in e M,

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Speaker 1: but Asia is relatively better. It's falling by around three

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Speaker 1: UM I was in Asia. There are a couple of

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Speaker 1: markets that are more negatively correlated or higher negative data.

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Speaker 1: These are Acian, India and Korea. UM. And you have

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Speaker 1: a few sectors that tend to lose more industrials and materials.

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Speaker 1: But there are also places of relative value and relative stability.

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Speaker 1: So I think it's risk off now. We seek value

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Speaker 1: and defense at this point, and once we get past

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Speaker 1: the fat hight next week, things could be re considered

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Speaker 1: for going on the case for India, Indonesia is something

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Speaker 1: we hear a lot. I wanted to get more of

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Speaker 1: your thoughts about China and whether or not. Things materially

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Speaker 1: change for investing in China once we're passed the Party Congress.

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Speaker 1: I do think so UM and Action and India, people

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Speaker 1: have seen more structural growth to it, so there's more

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Speaker 1: willingness to stick with those positions. UM for the Party Congress,

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Speaker 1: I think you do sons that things are waiting for

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Speaker 1: the reporting line to clarify before taking action, so that

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Speaker 1: is quite critical. I would point out we probably don't

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Speaker 1: need to wait till October sixteen. We can look to

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Speaker 1: October seventh, which is the time for the seventh clean UM,

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Speaker 1: and that would give us some good insight into the lineup.

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Speaker 1: One of the added difficulties is the US China dispute.

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Speaker 1: The latest was this US effort to reduce reliance on

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Speaker 1: on biotech, the impact of biotech in the United States,

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Speaker 1: the Biden administration talking about an executive order there and

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Speaker 1: a big sell off yesterday. Is it making it difficult

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Speaker 1: to invest in almost any sector here given the potential

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Speaker 1: impact of a move by either US or China. UM.

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Speaker 1: That's difficulty that's been met by our investors. UM. You know,

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Speaker 1: is this regulatory changes that's difficult of forecasts. UM. At

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Speaker 1: the same time, where we compare China and Japan. UM

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Speaker 1: from Japan's peak and property and equity markets in eighty nine,

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Speaker 1: it took the topics around fourteen years to get to

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Speaker 1: sixteen times top once forward, pe China is a time

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Speaker 1: to eleven times. So I think value is apparent and

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Speaker 1: they coudit. He is high. So if you see incremental

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Speaker 1: improvements UM in growth UH US China relationship, I think

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Speaker 1: people are willing to participate, but it is becoming more

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Speaker 1: of a trading market than a structural growth market. I

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Speaker 1: want to get your thoughts on that very strong fixed

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Speaker 1: from the PBOC about six people stronger than expected, the

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Speaker 1: strongest bias on record, and a fifteenth straight day to

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Speaker 1: try and defend the weakness in this one. Yeah, I

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Speaker 1: think seven has a very symbolic, strong symbolic meaning and

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Speaker 1: psychological too. Um. It is going to have an impact

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Speaker 1: on financial assets, so appeers based on the fixing bias,

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Speaker 1: there's a strong desire to defend the seventh YEP, and

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Speaker 1: right now we're hanging in there at least the offshore

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Speaker 1: at six twenty three. A lot of weakness in most

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Speaker 1: of these currencies. But then you mentioned in the first

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Speaker 1: part of our discussion that in terms of valuations, a

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Speaker 1: basket of Chinese stocks look pretty good at eleven times

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Speaker 1: eleven times earnings, so the Hanksing Index is trading at

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Speaker 1: seven times earnings. Do you like a basket of stocks

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Speaker 1: in Hong Kong and if so, which one's um? I

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Speaker 1: think you can buy those because the correlation is pretty

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Speaker 1: high between the two. Although on the way down, Hong

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Speaker 1: Kong finentials and Singapore financials tend to outperform when we

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Speaker 1: look at the dollar strengths and how the different sectors

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Speaker 1: by market, So so on the way down it would

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Speaker 1: be Hong Kong, Singapore, Indian financials that hold up better.

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Speaker 1: And what's going on the way up and on the

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Speaker 1: way up, UM, I think on the way up you're

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Speaker 1: really probably looking at quality. We turned a bit more

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Speaker 1: towards the quant methodo logy UM, so we're watching to

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Speaker 1: see when the credit numbers in China they improve. We

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Speaker 1: look at UM too. It's been growing at double digits,

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Speaker 1: but it's not converting into total social finiancing. So that

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Speaker 1: tells us that the enterprise and households confidence are low.

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Speaker 1: So when that turns, credit growth is going to pick up,

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Speaker 1: and it's going to be in favor of quality. These

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Speaker 1: are the higher O A higher O E names in

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Speaker 1: consumer staples, and so that's the next thing to look

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Speaker 1: forward to. We've probably got two more weeks of value

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Speaker 1: our performance based on the pattern of trading since the pandemic,

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Speaker 1: it generally out performs for seven weeks over growth, and

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Speaker 1: we're in the fifth week. You made an interesting point

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Speaker 1: in the first half of our discussion that China has

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Speaker 1: priced in Japan's lost decade plus even a geopolitical risk discount,

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Speaker 1: as well other places that look less troubled and perhaps

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Speaker 1: better maybe in the short term. I think you say

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Speaker 1: our India and in Indonesia make the buy case there. Okay,

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Speaker 1: So India, Indonesia and plus Vietnam, which is all benchmark.

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Speaker 1: These are the structural beneficiaries or supply chain relocation. So

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Speaker 1: when we look at the important tax sector, India still

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Speaker 1: are starting to get Apple's iPhone order IF fourteen, which

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Speaker 1: is quite significant. Vietnam um you see a vibrant sort

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Speaker 1: of relocation since before to the otheran eighteen and it's accelerating.

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Speaker 1: And then for Indonesia it's very rich in commodities and

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Speaker 1: Nichol is helping it to grow the local and b

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Speaker 1: supply chain and it's called HO and CPO, so this

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Speaker 1: is benefiting the local financials and consumption. And India, without

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Speaker 1: being said, has the biggest domestic market potential that we

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Speaker 1: could see. Um, you know, not just in Asia but globally.

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Speaker 1: Now they are a bit more expensive, but I think

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Speaker 1: you know, given if there's more political pressure or political

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Speaker 1: discord that we could see on China and then lack

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Speaker 1: of clarity on reopen, people may be willing to just

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Speaker 1: hold out. But I would say this weekend next week,

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Speaker 1: before the fact hike, you have a general risk of

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Speaker 1: your nation. And just a final broad question, Wendy, do

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Speaker 1: we avoid a global recession here? Um? Yeah, Well, our

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Speaker 1: our firm's view is that you're looking at um, you know,

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Speaker 1: the situation in the US. Employment is very strong. You

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Speaker 1: really don't get to a recession when employment is that strong.

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Speaker 1: And when we look at Europe, it's coming up subsidies

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Speaker 1: to cover the higher energy costs, so it's probably going

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Speaker 1: to avoid that also. All right, good you know, Wendy,

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Speaker 1: Thank you. Wendy. Lou Chief Asia and China equity strategist

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Speaker 1: JP Morgan joining us from Shanghai. Here on Bloomberg Daybreak.

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Speaker 1: Asian