Speaker 1: Let's get to June. Hung Lee, founder and CEO at
Speaker 1: Jail Warren Capital. So in terms of timing here, David Kelly,
Speaker 1: a JP Morgan Asset Management says it's now timed by
Speaker 1: stocks and bonds. The sell off has been enough. But
Speaker 1: if you look at the market cap of the Wilshire
Speaker 1: five thousands, that's basically the US stock market, it's about
Speaker 1: thirty seven trillion, and that's hundred and fifty percent of
Speaker 1: g d P. And Warren Buffett has famously said he
Speaker 1: feels more comfortable about eight percent. So what is it?
Speaker 1: Is it time to buy now or still be cautious?
Speaker 1: We remain very cautious. And the UM on Chinese equities,
Speaker 1: I think um if anyone wants to invest in China
Speaker 1: right now, multinationals with exposure to China perhaps is the
Speaker 1: best bet. But even so we think a near term
Speaker 1: COVID risk is still very high. And then you see
Speaker 1: Guandjo new case in Guanjo in New Cases a story,
Speaker 1: and you know all the restrictions are back on again.
Speaker 1: And you know, last last months October um into twentieth
Speaker 1: Party Congress Beijing was kind of impartial lava. And in
Speaker 1: September there was Chando. So it seems like each month
Speaker 1: there will be new hotspot for COVID lavta UM. So
Speaker 1: we don't see any material, meaningful, significant relaxation of a
Speaker 1: zero COVID strategy. So I think even though with that,
Speaker 1: even the central bank continues to loosen monetary policy, pumps
Speaker 1: a liquidity into the market and economy, the velocity of
Speaker 1: the money is holding back the economic recovery. So UM,
Speaker 1: we we see we don't have good visibility as to
Speaker 1: what the normalized economy will be after COVID UM and
Speaker 1: frankly after the new new cabinet started to work uh
Speaker 1: in Q one next year. So um, in the absence
Speaker 1: of a clear visibility of mescycle earnings, UM, of the economy,
Speaker 1: of the public companies we're trying to we're just holding
Speaker 1: back from looking at China directly, all right, So basically
Speaker 1: listen to them when they're saying, look, we are unswervingly
Speaker 1: sticking with COVID zero. What about the property sector though,
Speaker 1: do you think that we've potentially seen a bottom there?
Speaker 1: You saw that huge jump in developer stokes yesterday. Regulators
Speaker 1: expanding financial support there for that sector. But I remember correctly, um,
Speaker 1: the opening in the opening remarks UM other the twentieth
Speaker 1: Party Congress UM they mentioned the ones again homes are
Speaker 1: for living in all for invest So it seems like,
Speaker 1: you know, the central government and s o E s
Speaker 1: are bailing out project by project. But after this restructuring
Speaker 1: or de leverage, um, the s o E property developers
Speaker 1: will play a bigger role in the real estate sectors
Speaker 1: and the non performing or overly lever lever the developers
Speaker 1: will be washed out. And you're certainly showing that you
Speaker 1: are still cautious on the China market story. When we've
Speaker 1: been looking at these capital outflows. What brings that back in?
Speaker 1: Morgan Stanley was saying equities would lead a rebound inflows,
Speaker 1: but what about bond buying? Does that resume at a
Speaker 1: bit of a slower pace? Um. So, like we said
Speaker 1: earlier we discussed the earlier offshore investors remain very cautious
Speaker 1: on China, especially the Chinese equities UM and monitor in
Speaker 1: terms of monetary policy psychost China, the US art divergent. Um.
Speaker 1: The FED is tightening and the PBOC is losening. So um,
Speaker 1: you know, um, we were to see we believe there's
Speaker 1: more downside to reman the US dollar um more downside
Speaker 1: than upside, So in that regard, um, that's another head
Speaker 1: wing for the Chinese equities in Chinese economy in general.
Speaker 1: So yeah, yeah, your argument was pretty cogent that equities
Speaker 1: are not investable in China. Decided to COVID overhang and
Speaker 1: then also some of the other issues with with policy
Speaker 1: and with the property sector. What I'm curious about, though,
Speaker 1: is that you say that the way to play it
Speaker 1: is through multinationals. The issue is I suppose that Boeing
Speaker 1: and Nike and Disney are all companies that have faced
Speaker 1: a lot of headwinds because of some of these same
Speaker 1: policies in China. Would it be better to play Southeast
Speaker 1: Asian companies or European companies that are doing business in
Speaker 1: China or is even that a tricky area. I think
Speaker 1: the current environment is really great for stop kicking. So
Speaker 1: on the broad the broad brush, um, you can argue
Speaker 1: liquidity will be leaving China to our Southeast Asian verzios um.
Speaker 1: You know all those emergent markets, um. But the liquidity
Speaker 1: is not great. So that's why we prefer to play
Speaker 1: China still with multinationals. On on a lo side, as
Speaker 1: well as on the shore side. For example, we very
Speaker 1: much like the idea of the short idea of Tesla
Speaker 1: because effectively, it's a it's a Chinese stock with it's
Speaker 1: more than fifty of the production capacity in China and
Speaker 1: thirty percent of the global shipment coming out of China.
Speaker 1: So and because it's a heavy exposure to China and
Speaker 1: to running b and to the slow economy and to
Speaker 1: geopolitics between US and China, we think it is a
Speaker 1: very interesting stock. So we're trying to look at the
Speaker 1: company by company, and then you know, Nike, on the
Speaker 1: other hand, we believe their substantial upside because you know,
Speaker 1: once the bc I saga is over and the impact
Speaker 1: is gone, uh, the normalize the demand that it continues
Speaker 1: to be very high. UM. So this is a perfect
Speaker 1: environment for stock picks as opposed to macro kind of
Speaker 1: you know, big picture bets. All right, let's talk about
Speaker 1: the currency. We know that a lot of the is
Speaker 1: being due to a dollar strength, but also a lot
Speaker 1: of movement from authorities to try and stabilize the one
Speaker 1: as well, barring, as you say, any major lockdown events.
Speaker 1: Where do we see the un trade? UM? I think um,
Speaker 1: just like I said earlier. UM looks like the central
Speaker 1: bank the government in China continues to losen because in
Speaker 1: the velocity of the money isn't there, So they're trying
Speaker 1: to pump in um as much liquidity into the market,
Speaker 1: into the economy. UH, some in via the infrastructure projects
Speaker 1: and some via you know, the bail else to on
Speaker 1: the unfinished the projects, and some into s O ees.
Speaker 1: So the monetary cycle over there is UH is loosening
Speaker 1: this versus titaning in the US. So we believe UM
Speaker 1: let maybe visa the US dollar will continue to weaken,
Speaker 1: but probably not by a big margin, so probably sideway
Speaker 1: around like seven point two five to seven point five. Okay,
Speaker 1: really quickly, you mentioned Tesla had a good looking profile there.
Speaker 1: What about some of the local makers like Neo and
Speaker 1: Expung and h and the Otto. I think this is
Speaker 1: such an interesting time to look at evs. On the
Speaker 1: one hand, you can argue the regulatory support has given
Speaker 1: such a nice boost to all the EV capacity and
Speaker 1: the productions. On the other hand, the competition is really
Speaker 1: catching up, and that if you are a pure EV player,
Speaker 1: you're only making five thousand to ten thousand cars a
Speaker 1: month and selling that much it is not a real business.
Speaker 1: It's not generally at J. L. Warren Capital