1 00:00:00,120 --> 00:00:01,600 Speaker 1: Let's get to our guest. Daniel Lamb is head of 2 00:00:01,639 --> 00:00:04,400 Speaker 1: Equity strategy at Standard Charted Wealth Management, joining us from 3 00:00:04,440 --> 00:00:06,400 Speaker 1: our Hong Kong studio. So a lot to talk about 4 00:00:06,440 --> 00:00:10,319 Speaker 1: in where opportunities are for investors in Asia, but let's 5 00:00:10,320 --> 00:00:12,360 Speaker 1: start with the FED, where they are expected to raise 6 00:00:12,480 --> 00:00:15,720 Speaker 1: rates by seventy five basis points this week. Is that 7 00:00:15,840 --> 00:00:17,479 Speaker 1: priced in? And how do you I guess kind of 8 00:00:17,480 --> 00:00:23,680 Speaker 1: hedge the FED here, Yes, is certainly been priced in 9 00:00:23,720 --> 00:00:27,880 Speaker 1: by the market. And at this moment in time, if 10 00:00:27,920 --> 00:00:30,680 Speaker 1: you look at the US tenure yield, it it is 11 00:00:30,800 --> 00:00:34,640 Speaker 1: at three and a half percent, and at this moment, 12 00:00:34,760 --> 00:00:38,040 Speaker 1: it seems that it is at a you know, at 13 00:00:38,040 --> 00:00:41,760 Speaker 1: a resistance level. Okay, so three point five, you know, 14 00:00:41,840 --> 00:00:45,760 Speaker 1: could be overshooting two three point seven, but it seems 15 00:00:45,800 --> 00:00:48,519 Speaker 1: to be likely to be anchoring around these levels. So 16 00:00:48,920 --> 00:00:52,720 Speaker 1: you know, two ideas that we have for our investors. 17 00:00:52,760 --> 00:00:55,640 Speaker 1: So one of them is d M I G corporate 18 00:00:55,640 --> 00:00:59,279 Speaker 1: bonds because they're uelding more than five percent and if 19 00:00:59,280 --> 00:01:01,360 Speaker 1: you look at how much they've been yielding over the 20 00:01:01,440 --> 00:01:04,679 Speaker 1: last seven eight years, been like two and a half percent, 21 00:01:04,880 --> 00:01:07,120 Speaker 1: So this is very attractive yield. You do need some 22 00:01:07,200 --> 00:01:10,679 Speaker 1: defensive exposure. Um, you do need to have some income 23 00:01:10,720 --> 00:01:14,520 Speaker 1: carry um to be able to combat markets like these. 24 00:01:14,800 --> 00:01:19,080 Speaker 1: The other idea is high different equities globally, because if 25 00:01:19,080 --> 00:01:21,320 Speaker 1: you look at times when US c p I is 26 00:01:21,360 --> 00:01:27,399 Speaker 1: above three percent, global, high different equities outperformed global equities 27 00:01:27,440 --> 00:01:30,240 Speaker 1: by about six percent. They actually had an absolute return 28 00:01:30,280 --> 00:01:34,520 Speaker 1: of about four percent positive versus global equities down two 29 00:01:34,600 --> 00:01:37,560 Speaker 1: percent in those periods. When do you expect that we 30 00:01:37,600 --> 00:01:40,760 Speaker 1: could see a fat pivot and what will perform well 31 00:01:40,840 --> 00:01:47,240 Speaker 1: in such an outcome. Well, given the later CPI print, 32 00:01:47,280 --> 00:01:50,600 Speaker 1: that fat pivot has been pushed I guess pushed back 33 00:01:51,520 --> 00:01:55,280 Speaker 1: into the future. So we probably need to see a 34 00:01:55,320 --> 00:02:00,120 Speaker 1: couple of more prints that are below expectations for this 35 00:02:00,280 --> 00:02:04,200 Speaker 1: pivot narrative to return. UM. If that is the case, 36 00:02:04,680 --> 00:02:09,000 Speaker 1: um that the higher growth stocks would probably do very 37 00:02:09,040 --> 00:02:12,680 Speaker 1: well in those environments because you'll be expecting that the 38 00:02:12,840 --> 00:02:15,200 Speaker 1: US would be coming off and that would help the 39 00:02:15,280 --> 00:02:19,280 Speaker 1: valuation of those growth stocks. All right, let's talk about Asia. Now, 40 00:02:19,280 --> 00:02:21,800 Speaker 1: we did have that hot inflation rate from Japan. Is 41 00:02:21,840 --> 00:02:23,640 Speaker 1: it hot enough to move the dial though when it 42 00:02:23,639 --> 00:02:27,519 Speaker 1: comes to the Bank of Japan, probably not. I think 43 00:02:27,639 --> 00:02:32,959 Speaker 1: Japan has Japan really has the chronic um this inflation issue, 44 00:02:33,440 --> 00:02:36,760 Speaker 1: so they probably need to see a feel prints like 45 00:02:36,840 --> 00:02:41,880 Speaker 1: this before that bank bo J consider possibly skating back 46 00:02:42,360 --> 00:02:44,519 Speaker 1: on the outer loose policy. So the dollar yen is 47 00:02:44,520 --> 00:02:47,000 Speaker 1: probably here to stay at around these levels. And we 48 00:02:47,040 --> 00:02:49,600 Speaker 1: saw such big moves in dollar yen and j g 49 00:02:49,800 --> 00:02:52,760 Speaker 1: B futures last week as well the three and a 50 00:02:52,760 --> 00:02:55,440 Speaker 1: half percent treasury rate as well. How much does that 51 00:02:55,560 --> 00:02:58,000 Speaker 1: kind of potentially have an impact on the bo J 52 00:02:58,120 --> 00:03:02,359 Speaker 1: decision when we're looking at the CEO different shore. Well, 53 00:03:02,480 --> 00:03:06,640 Speaker 1: I think at this moment in time, the Japan economy 54 00:03:06,720 --> 00:03:11,800 Speaker 1: do need such weakness in the yen, okay, because it 55 00:03:11,880 --> 00:03:15,520 Speaker 1: does help the exporters. They are trying to boost up 56 00:03:15,520 --> 00:03:19,880 Speaker 1: the tourism again, so you know, of course I think 57 00:03:19,880 --> 00:03:22,280 Speaker 1: they would let the yen stay around these levels. I 58 00:03:22,320 --> 00:03:25,320 Speaker 1: think unless they go above one fifty, they wouldn't be 59 00:03:25,360 --> 00:03:28,640 Speaker 1: doing anything concrete. A lot of this, as we know 60 00:03:28,760 --> 00:03:30,880 Speaker 1: with what's happening in dollar yen, is happening in e 61 00:03:31,000 --> 00:03:33,840 Speaker 1: M currencies because of the strength of the dollar as well. 62 00:03:33,880 --> 00:03:37,440 Speaker 1: We mentioned earlier waiting to see what the PBOC fixes today, 63 00:03:37,480 --> 00:03:39,760 Speaker 1: how much of a guess is a stress that we 64 00:03:39,800 --> 00:03:44,880 Speaker 1: could see seven point to five now seven point two five. 65 00:03:44,920 --> 00:03:48,720 Speaker 1: I think that's it's certainly a possibility because you do 66 00:03:48,880 --> 00:03:53,920 Speaker 1: have you know, the property issues blooming at the Chinese economy, 67 00:03:54,200 --> 00:03:58,160 Speaker 1: and there are still a few weeks before the before 68 00:03:58,160 --> 00:04:01,800 Speaker 1: the Congress at the end of October, So until Dan, 69 00:04:01,920 --> 00:04:06,040 Speaker 1: I think, you know, big policies to stimulate the economy 70 00:04:06,120 --> 00:04:09,600 Speaker 1: is probably unlikely. Talking about the China Party Congress there 71 00:04:09,600 --> 00:04:12,280 Speaker 1: which is drawing closer, and we have seen Beijing step 72 00:04:12,320 --> 00:04:14,960 Speaker 1: up efforts to ensure economic and market stability, but as 73 00:04:14,960 --> 00:04:19,320 Speaker 1: Bloomberg News reports, one prominent player, the stock markets National Team, 74 00:04:19,400 --> 00:04:21,400 Speaker 1: has been missing. When do you think we could see 75 00:04:21,400 --> 00:04:24,760 Speaker 1: some intervention there and how much does the attractiveness of 76 00:04:24,800 --> 00:04:29,359 Speaker 1: investing in China change after the Party Congress. Well, I 77 00:04:29,400 --> 00:04:35,800 Speaker 1: think the issues need to be addressed further um i e. 78 00:04:36,000 --> 00:04:39,119 Speaker 1: In the property market, right for example, so we've seen 79 00:04:39,160 --> 00:04:44,599 Speaker 1: measures such as lowering of down payment, easing for non 80 00:04:44,640 --> 00:04:49,840 Speaker 1: locals to be buying um properties in different cities, etcetera. Right, 81 00:04:49,880 --> 00:04:52,640 Speaker 1: But the root cause of all these I think is 82 00:04:53,720 --> 00:04:58,799 Speaker 1: probably needs to be addressed is the uh Zerial COVID policy. Okay, 83 00:04:58,800 --> 00:05:04,040 Speaker 1: because that's been causing much disruption in the economies and 84 00:05:05,279 --> 00:05:07,760 Speaker 1: the reason why we have the policies because of the 85 00:05:08,360 --> 00:05:11,040 Speaker 1: I guess it's the health care system, right. The Chinese 86 00:05:11,080 --> 00:05:14,800 Speaker 1: authorities need to be I'm sure that there are enough 87 00:05:14,839 --> 00:05:19,960 Speaker 1: people vaccinated before considering any steps contrary to that policy. 88 00:05:20,279 --> 00:05:23,200 Speaker 1: So that needs to be stepped up. And if that 89 00:05:23,520 --> 00:05:27,680 Speaker 1: is solved, the economy gradually normalizes, then we will see 90 00:05:27,680 --> 00:05:31,920 Speaker 1: easing pressure across you know, all the sectors. Until then, 91 00:05:31,960 --> 00:05:34,920 Speaker 1: we're I think we're solving We're solving these symptoms rather 92 00:05:35,000 --> 00:05:38,359 Speaker 1: than solving the root causes. Yeah, it's a bit of 93 00:05:38,360 --> 00:05:40,880 Speaker 1: a band aid effect, if you will. But is there 94 00:05:40,960 --> 00:05:45,200 Speaker 1: particular sectors that you think could be potentially affected here? 95 00:05:45,200 --> 00:05:48,400 Speaker 1: I mean, regardless of what happens with the COVID zero policy, 96 00:05:48,400 --> 00:05:52,680 Speaker 1: you've still got the property crisis that you alluded to earlier. Yes, 97 00:05:52,800 --> 00:05:57,280 Speaker 1: So in terms of sectors, um, of course, right now, 98 00:05:57,560 --> 00:06:00,640 Speaker 1: the growth sectors are all hit because of the high 99 00:06:00,720 --> 00:06:05,960 Speaker 1: yield across the entire world. Um So if inflation globally 100 00:06:06,040 --> 00:06:09,640 Speaker 1: comes off, the use come off, then those sectors I 101 00:06:09,640 --> 00:06:15,839 Speaker 1: think a prime for a strong rebound. So that's the 102 00:06:16,000 --> 00:06:18,200 Speaker 1: sector that one should be one should be watching up for. 103 00:06:18,640 --> 00:06:20,880 Speaker 1: All right, the strong rebound there, let's talk more broadly 104 00:06:20,920 --> 00:06:23,560 Speaker 1: about what we're seeing across the Asia Pacific. It is 105 00:06:23,600 --> 00:06:26,640 Speaker 1: a separate economy when you look at what's happening in 106 00:06:26,680 --> 00:06:29,640 Speaker 1: the likes of Hong Kong, Taiwan, China with a dynamic 107 00:06:29,720 --> 00:06:31,520 Speaker 1: zero COVID zero, however you want to put it. But 108 00:06:31,920 --> 00:06:34,680 Speaker 1: the rest of Asia is very much coming back to life. 109 00:06:34,720 --> 00:06:38,039 Speaker 1: You mentioned the potential tourism return to Japan. To where 110 00:06:38,040 --> 00:06:42,000 Speaker 1: do you see opportunity? Is it in Southeast Asia? So 111 00:06:42,200 --> 00:06:44,960 Speaker 1: we say you're India and India is looking pretty good 112 00:06:45,000 --> 00:06:48,640 Speaker 1: because the if you look at the data coming up 113 00:06:48,680 --> 00:06:52,680 Speaker 1: from India, retail sales actually booming countrary to what we 114 00:06:52,720 --> 00:06:57,120 Speaker 1: saw in China. And you do see that in terms 115 00:06:57,120 --> 00:06:59,359 Speaker 1: of the property market is actually doing very well and 116 00:06:59,520 --> 00:07:03,000 Speaker 1: supporting consumption as well. Everything loops loops together if you 117 00:07:03,000 --> 00:07:06,120 Speaker 1: have a good property market consumptions there and then everything 118 00:07:06,240 --> 00:07:09,520 Speaker 1: just goes in a in a positive cycle. So India's 119 00:07:09,560 --> 00:07:12,440 Speaker 1: looking pretty good to me. We've been looking as well 120 00:07:12,480 --> 00:07:15,520 Speaker 1: at grain A s G investments. But the impact of 121 00:07:15,560 --> 00:07:19,440 Speaker 1: the energy crisis some saying could potentially affect this. How 122 00:07:19,480 --> 00:07:21,520 Speaker 1: closely are you looking at at that, and not only 123 00:07:21,560 --> 00:07:24,840 Speaker 1: how much of it's turning into a recessionary fear for Europe, 124 00:07:24,840 --> 00:07:27,200 Speaker 1: but how it can affect investors as well. When it 125 00:07:27,240 --> 00:07:31,560 Speaker 1: comes to looking at s G energy crisis in Europe, 126 00:07:31,560 --> 00:07:37,040 Speaker 1: I think the energy cap should be able to alleviate 127 00:07:37,080 --> 00:07:40,200 Speaker 1: some of the pressure on the European consumers. UM. Euro 128 00:07:40,360 --> 00:07:44,320 Speaker 1: itself is actually at a very good support level at 129 00:07:44,320 --> 00:07:48,240 Speaker 1: this moment in time, So any potential turn in the 130 00:07:48,360 --> 00:07:53,360 Speaker 1: US inflation situations, I any alleviation of the inflation could 131 00:07:53,400 --> 00:07:58,080 Speaker 1: be sending euro dollar higher. So Europe is it's situation 132 00:07:58,240 --> 00:08:00,520 Speaker 1: is not great, but you know a lot of that 133 00:08:00,640 --> 00:08:04,240 Speaker 1: has been priced in UM in terms of sorry, now 134 00:08:04,280 --> 00:08:07,240 Speaker 1: you go on continue yep. In terms of e s 135 00:08:07,320 --> 00:08:11,120 Speaker 1: G again, a lot of these e s G names, 136 00:08:11,160 --> 00:08:15,760 Speaker 1: they are looking at the future, right, So the valuation 137 00:08:15,920 --> 00:08:20,800 Speaker 1: is at the relatively high level versus many other UM 138 00:08:21,120 --> 00:08:25,200 Speaker 1: sectors or stocks. So again it's really the you that 139 00:08:25,920 --> 00:08:28,160 Speaker 1: needs to come down before they can they can. Really, 140 00:08:28,160 --> 00:08:31,720 Speaker 1: it's really a macro scenario here, all right, But you 141 00:08:31,760 --> 00:08:34,240 Speaker 1: do say you're cautious on energy stocks. Daniel, We thank 142 00:08:34,280 --> 00:08:35,959 Speaker 1: you for your time. Daniel Lamb is head of Equity 143 00:08:36,000 --> 00:08:37,800 Speaker 1: Strategy at Standard Charted Wealth Management.