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Speaker 1: I guess is Frank ben Zimra, ahead of Asia Equity

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Speaker 1: strategy and multi assets strategist at Suen with his live

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Speaker 1: here on the radio. The equity markets sell off so far,

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Speaker 1: Frank has been reasonably stable in the United States at least,

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Speaker 1: and we know the Fed doesn't really care too much

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Speaker 1: about selling in the equity markets or bond yields rising

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Speaker 1: as they've been rising. But the currency markets could be

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Speaker 1: another matter. Uh, it's it's seeming a little bit disorderly

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Speaker 1: here at the moment. You think that it could soon

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Speaker 1: draw some concern from the Fed. Frank, Yes, so, Uh

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Speaker 1: what what what we have seen so far is a

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Speaker 1: very major change of stance of the of the Fed

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Speaker 1: with the fight against inflation being unconditioned. And I think

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Speaker 1: this is something that's going to that's going to continue.

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Speaker 1: Whatever we are seeing on the different different markets on

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Speaker 1: the UH. Also what you could see on the on

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Speaker 1: the currency market. Uh. This last week was also some

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Speaker 1: more industing critical element coming from coming from Europe. Whether

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Speaker 1: this was a very poor manufacturing data for the Eurozone

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Speaker 1: or whether it was Russia or the very aggressive fiscal

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Speaker 1: plan by the truth government. So this was also some

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Speaker 1: of the elements which were more specific to to Europe

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Speaker 1: and was that what the Fed is doing. But of

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Speaker 1: course the Fed hiking very much boosting the dollar, which

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Speaker 1: is a story that we're seeing play out in Asia. Two.

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Speaker 1: How much of a concern is a reprise of what

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Speaker 1: happened in nine? Uh? Well we uh we we we started.

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Speaker 1: One interesting element that we had last week was the

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Speaker 1: monetary authority in in Japan starting to intervene UH. And

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Speaker 1: we are seeing a lot of observer being quite skeptical

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Speaker 1: about how sustainable it's going to be, and we can

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Speaker 1: understand that, we can understand why UH. And also what

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Speaker 1: what we are seeing is some central banks which might

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Speaker 1: not have needed to increase interest rate because of their

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Speaker 1: own situation and on a domestic condition, while actually rising

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Speaker 1: more than expected. And so Bank Indonesia last week was

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Speaker 1: a quite interesting case of points because they had this

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Speaker 1: big increase of fifty basis points. And this was really

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Speaker 1: because of the fact the move that we are seeing

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Speaker 1: on the Korean one, on the on the on the

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Speaker 1: Korean treasury bond also last week was very much driven

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Speaker 1: by a more akish Bank of Korea and this is

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Speaker 1: because of what we are seeing on the currency market,

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Speaker 1: so and and so this is where we can see

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Speaker 1: also of more trouble coming from for the for the

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Speaker 1: equity market. And one one investment thesis that we have

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Speaker 1: had quite some time in on the equity market is

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Speaker 1: how this type of financial condition in the US is

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Speaker 1: impacting as equity market. It is generally berish, but we

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Speaker 1: are seeing increasingly some split between East and South Asia.

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Speaker 1: So we're very clean to say what kind of reopening

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Speaker 1: play we will see in Hong Kong. When you've got

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Speaker 1: the hang Stang at its lower since November twenty eleven,

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Speaker 1: how much does the dropping of quarantine, the relaxation of

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Speaker 1: two groups into Macau help the overall picture. Well, first,

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Speaker 1: first of all, and you you have the overall picture

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Speaker 1: in UH in the case of Hong Kong, which has

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Speaker 1: two major issue as the first one is the economic

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Speaker 1: slump in in China and the second one is the

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Speaker 1: interest rate environment, and Hong Kong being following what what

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Speaker 1: the FED is, what what the FED is doing? So

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Speaker 1: this is really the big picture for Hong Kong and

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Speaker 1: UH it's going to continue to weigh on the on

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Speaker 1: the market. Now. Having said that, you have a number

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Speaker 1: of of socks and whether it is a Marcal gaming,

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Speaker 1: whether it has it is some transportation company, whether it

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Speaker 1: could be some insurance company as well when we being

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Speaker 1: to talk about some reopening with China. So these are

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Speaker 1: some group of stocks which which could which could benefit.

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Speaker 1: Nobody wants a weak currency right now. It seems like

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Speaker 1: the dollars just beat up on everything and and we

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Speaker 1: saw saw that with the intervention from Japan. They certainly

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Speaker 1: don't see advantages in a weaker currency, and PBOC is

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Speaker 1: trying to stem the flow. So in a sense, the

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Speaker 1: Hong Kong repect the US, it is probably good for

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Speaker 1: Hong Kong, right uh yeah, But what you what you

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Speaker 1: have to consider as well is that you have for

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Speaker 1: the first time since two thousand eighteen, the HSBC, which

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Speaker 1: is which is rising the prime best the best rate

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Speaker 1: and the landing at at five point one to five percent,

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Speaker 1: and this is going to have some impact on the

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Speaker 1: on the mortgage owner. You have most of the most

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Speaker 1: of the rates are floating in Hong Kong. So yes,

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Speaker 1: we in Hong Kong, we have a very low level

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Speaker 1: of inflation and we have some protection through the through

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Speaker 1: the Hong Kong dollar. But at the moment for Hong Kong.

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Speaker 1: I see more uh more problem and more negative coming

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Speaker 1: from this interest rate environment and positive coming from the

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Speaker 1: from the from the currency. Frank, you've just upgraded India

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Speaker 1: stocks to overweight from neutral. You say the performance in

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Speaker 1: common currency to Asian peers over the past quarter has

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Speaker 1: been underpinned by resilient earnings. I mean, how much further

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Speaker 1: strength are you saying here? Yeah? So, uh well, on

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Speaker 1: well we well for for first, first of all, on all,

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Speaker 1: on all the global market and global equicky market, we

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Speaker 1: don't have any any upsite on the on the on

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Speaker 1: the on the market. Now on the relative basis, we

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Speaker 1: can see some market doing better than other and India

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Speaker 1: is is one of them, and it is one of

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Speaker 1: them because the earnings dynamics, unlike what you could see

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Speaker 1: in Europe or in some market like Korea, Taiwan, in

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Speaker 1: in our part of the world, is less depending on

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Speaker 1: the global condition and more of the domestic dynamics which

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Speaker 1: are which actually not too bad in in the in

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Speaker 1: the case of in the case of India, and you

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Speaker 1: have some valuation on some part of the market, especially

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Speaker 1: on the domestic partum um like the banking sector, where

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Speaker 1: it is getting back to descent level, So so on

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Speaker 1: the wall, on the on the nifty, we have a

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Speaker 1: very little upside, but we see within the market some

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Speaker 1: more serious subside on the domestic sector and on the

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Speaker 1: banking sector in particular on China. I don't think anybody

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Speaker 1: is expecting COVID zero to go away after the Party Congress,

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Speaker 1: but they may take some steps to improve the property market.

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Speaker 1: Does that help the banks? Would you would you want

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Speaker 1: to play the banks in China? Well? Uh we we we,

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Speaker 1: We are not negative on banks in in China for

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Speaker 1: the very simple reason that there has been this enormous

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Speaker 1: the rating already happening between between the start of the

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Speaker 1: year and August is here, which in our view is

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Speaker 1: pricing some amount of non performing loan of around seven

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Speaker 1: percent of the total loan book. So a lot, a

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Speaker 1: lot of the bad news have already been priced in.

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Speaker 1: Now we all know that the very very cheap ast

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Speaker 1: thatt can uh stay very low for quite an extended

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Speaker 1: period of time. Yeah, we're gonna have to live it there, Frank,

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Speaker 1: We thank you as always. Frank ben Zimmer, ahead of

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Speaker 1: Asia Equity Strategy and multi Asset Strategist at Society General,

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Speaker 1: joining us from Hong Kong,