WEBVTT - Yen Hits Four-Decade Low, China's Manufacturing Activity Returns to Growth 0:00:02.480 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio News. 0:00:10.760 --> 0:00:14.480 Welcome to the Daybreak Asia podcast. I'm deg Krisner. Tuesday 0:00:14.640 --> 0:00:17.000 marks the end of the second quarter, and it's likely 0:00:17.079 --> 0:00:19.880 to be the best quarter for US equities in six years. 0:00:20.079 --> 0:00:22.840 So far, the S and P five hundred is up 0:00:22.880 --> 0:00:27.080 nearly fourteen percent in Q two. Sound impressive. Consider this 0:00:27.280 --> 0:00:30.920 In that same period, South Korea's cospy is up more 0:00:30.960 --> 0:00:33.800 than sixty four percent in the local currency. 0:00:34.400 --> 0:00:35.040 So we have a. 0:00:35.000 --> 0:00:37.600 Holiday shortened week in the States. Markets will be closed 0:00:37.640 --> 0:00:41.480 Friday to mark Independence Day. We will get monthly jobs 0:00:41.560 --> 0:00:44.360 data that will be released on Thursday. For a closer 0:00:44.400 --> 0:00:46.159 look at some of the price action, let's bring in 0:00:46.159 --> 0:00:50.600 Bloomberg strategist David Finnerty. David joins from our studios in Singapore. 0:00:50.760 --> 0:00:52.800 Thank you for being here. Can we start in the 0:00:52.840 --> 0:00:56.120 foreign exchange, which is kind of your specialty. The en 0:00:56.280 --> 0:00:59.400 right now flirting with a forty year low against the Greenbeck, 0:01:00.000 --> 0:01:03.720 you'll be betting on intervention right now. I'm looking at 0:01:03.720 --> 0:01:05.400 one sixty two against the dollar. 0:01:06.160 --> 0:01:09.759 Yeah, it's about one sixty two twenty three the last 0:01:09.800 --> 0:01:12.240 I saw, so both the one sixty two level. Yeah 0:01:12.360 --> 0:01:14.680 for me, he won sixty two to one sixty three 0:01:14.959 --> 0:01:18.520 area I think is intervention territory for MF. 0:01:18.640 --> 0:01:20.720 I mean's got a bit of a problem here. 0:01:21.120 --> 0:01:23.600 One is that it knows last time it did intervene 0:01:23.680 --> 0:01:26.600 or legitdly intervened, it didn't last very long at all 0:01:26.640 --> 0:01:29.320 when downe one fifty five and bounce back. The second 0:01:29.400 --> 0:01:33.240 thing is you have Kevin Walsh speaking tomorrow, you have 0:01:33.400 --> 0:01:36.760 US payrolls to day after. If war sounds hawks or 0:01:36.800 --> 0:01:40.479 payrolls comes in strong or both of those obviously dollars supportive. 0:01:40.600 --> 0:01:43.679 So if you intervene now, you're going, well, he may 0:01:43.680 --> 0:01:46.440 be a fighting a rising tide of dollar strength. 0:01:46.959 --> 0:01:49.240 So I think they'd like to intervene now. 0:01:49.280 --> 0:01:52.760 I think they're well aware of these headwinds that could 0:01:52.800 --> 0:01:55.640 or taw winds for dollar that could materialize. But cet 0:01:55.640 --> 0:01:57.800 I think one sixty two, one sixty three were definitely 0:01:57.800 --> 0:01:59.800 in a where they may intervene again. 0:02:00.360 --> 0:02:03.240 So it's not necessarily if we did get some sort 0:02:03.280 --> 0:02:06.400 of intervention that the psychology of the market changes. It's 0:02:06.440 --> 0:02:10.119 basically you're triggering a short squeeze right pretty much. 0:02:10.160 --> 0:02:13.200 I think that as far as the market's concerned, this 0:02:13.280 --> 0:02:17.320 is a dollar yen story higher it's position. For that, 0:02:17.400 --> 0:02:20.280 I think anything any intervention would be just see as 0:02:20.280 --> 0:02:22.600 opportunity to buy the dip. If I'm on a surn 0:02:22.639 --> 0:02:24.960 anything around one fifty five, I think they if it 0:02:25.080 --> 0:02:28.080 even got that low, even one fifty seven, I think 0:02:28.120 --> 0:02:30.400 people propably to start by this up again because I 0:02:30.440 --> 0:02:32.519 think from the market's perspective to go, look. 0:02:32.400 --> 0:02:34.640 The underlying scenario hasn't changed the tool. 0:02:34.919 --> 0:02:37.679 And we know from recently that when you did intervene, 0:02:37.880 --> 0:02:41.960 it lasted, it lasted very short the dip. 0:02:42.440 --> 0:02:44.679 So therefore, in Bolden's trying. 0:02:44.440 --> 0:02:47.360 To say, okay, it's by the dip again, nothing's really changed. 0:02:47.480 --> 0:02:53.680 Bojay's hiking gradually hawkish. If Warshaw Payrolls comes in, you know, 0:02:53.919 --> 0:02:57.760 hawkish slash strong for payrolls. But I think they'll say, look, okay, 0:02:57.800 --> 0:03:00.400 the dollar side of equation is still very strong. We're 0:03:00.400 --> 0:03:03.080 still worried about fiscal spending in Japan. So they're going 0:03:03.080 --> 0:03:05.440 to go, look, nothing's changed, so why should I short it. 0:03:05.480 --> 0:03:07.640 You're only going to short dotti in if you think 0:03:07.800 --> 0:03:09.959 mf's coming into v which obviously they may. But once 0:03:09.960 --> 0:03:11.800 they've done that, I think it turned around very quickly 0:03:11.800 --> 0:03:13.880 and say look I think now just to buy it. 0:03:14.160 --> 0:03:16.840 So you mentioned FED shir Kevin worsh there making his 0:03:17.160 --> 0:03:20.960 debut public appearance outside the US this week at the 0:03:21.000 --> 0:03:25.480 ECB symposium in Central Portugal. At that last FED meeting, 0:03:25.560 --> 0:03:28.519 he sounded maybe a little more hawkish than the market 0:03:28.720 --> 0:03:31.680 was expecting. Do you think that tone is going to 0:03:31.720 --> 0:03:35.200 remain in place? If he addresses kind of monetary policy. 0:03:35.800 --> 0:03:36.680 It's certainly gonna. 0:03:36.480 --> 0:03:40.200 Be interesting because since that last FED meeting, obviously oil 0:03:40.240 --> 0:03:42.800 prices have come off and they come up quite considerably, 0:03:43.200 --> 0:03:45.040 So it is going to be interesting to see if 0:03:45.040 --> 0:03:48.360 he maintains that stance or if he slightly eases it. 0:03:48.920 --> 0:03:52.120 Obviously you can have still second amount effects from higher 0:03:52.120 --> 0:03:54.400 oil prices. So I don't think about the woods, but 0:03:54.440 --> 0:03:56.720 I think the market. Remember, the market when he was 0:03:56.720 --> 0:03:59.120 appointed was assuming, oh, you know, he's going to come 0:03:59.120 --> 0:04:02.320 in and do cuts what President Trump wants. 0:04:02.520 --> 0:04:03.840 Obviously that since. 0:04:03.720 --> 0:04:06.120 Change, but it will be interesting now he's got another 0:04:06.240 --> 0:04:10.080 chance quite soon after last FED meeting, so has changed 0:04:10.080 --> 0:04:14.040 with oil that if he wants to not duvish stance 0:04:14.080 --> 0:04:17.480 but more of a neutral stance, should we say he 0:04:17.560 --> 0:04:19.840 could do it now? And so I think the market's 0:04:19.880 --> 0:04:22.680 definitely wary of you. What does he say? But again 0:04:22.880 --> 0:04:25.200 very quickly, the iron is it's followed the following day 0:04:25.200 --> 0:04:28.720 by payroll. So even if he was say more neutral, 0:04:29.040 --> 0:04:31.279 I think obviously US shields and donald would come off. 0:04:31.440 --> 0:04:33.520 But then again, if you get a strong payroll data 0:04:33.800 --> 0:04:36.440 the day after, they go, well, we do need to hike. 0:04:36.880 --> 0:04:40.799 So just the timing of both these events it's very interesting. 0:04:40.839 --> 0:04:43.600 But again I think he does have a chance if 0:04:43.640 --> 0:04:47.240 he wishes to to go more neutral, giving the oil 0:04:47.240 --> 0:04:49.280 has come off. If he's still hawkish, then the market 0:04:49.320 --> 0:04:51.520 will go Okay. He's definitely got a hawkish stance. 0:04:51.760 --> 0:04:53.839 So let's pick up on that fact that oil has 0:04:53.920 --> 0:04:57.080 come off the highs after the onset of the war 0:04:57.120 --> 0:05:00.560 in Iran. Obviously the US has been in did we 0:05:00.640 --> 0:05:03.559 know what WTI has been doing? But I'm thinking about 0:05:03.680 --> 0:05:06.799 economies in Asia, I'm thinking about Japan, I'm thinking about 0:05:06.839 --> 0:05:10.840 South Korea. Are those central banks in somewhat a different 0:05:10.880 --> 0:05:13.040 position than the FED finds itself in. 0:05:13.880 --> 0:05:14.919 I think certainly. 0:05:15.040 --> 0:05:17.320 Look some of them have the you know, Bank of 0:05:17.360 --> 0:05:21.240 Japan's raise rates in Philippine and Indonesia phrase rates, so 0:05:21.240 --> 0:05:24.359 they have raised race. I think now the question is 0:05:24.360 --> 0:05:26.640 how much more would they need to raise rates. I 0:05:26.640 --> 0:05:29.040 think it varies from central bank to central bank. I 0:05:29.080 --> 0:05:31.760 think if you look at Indonesia, the classic case they 0:05:31.800 --> 0:05:33.920 is they were really doing it to support the currency, 0:05:33.920 --> 0:05:35.960 and they were very honest about that. They've intermed in 0:05:36.000 --> 0:05:39.360 the fix markets. They did an off cycle rate hike 0:05:39.800 --> 0:05:42.560 to support the currency. So you know, if this dollar 0:05:42.600 --> 0:05:44.640 strength continues, then I think they may go, look, we 0:05:44.720 --> 0:05:47.400 just have to hike to support the currency. I think 0:05:47.480 --> 0:05:50.440 other currencies maybe a bit more like who were looking 0:05:50.480 --> 0:05:55.120 at inflation? We have MS Ministry Authority of Seeingapore next 0:05:55.200 --> 0:05:58.719 month with their quarterly meeting. The most recent inflation data 0:05:58.880 --> 0:06:01.640 when they look at coursep is really what they focus on, 0:06:01.920 --> 0:06:06.400 came in sort of bit below estimates, so signally nonall worries. 0:06:06.440 --> 0:06:09.440 So there was some expectations and this she got head 0:06:09.440 --> 0:06:11.800 of that data that they may titan. They may be 0:06:11.880 --> 0:06:14.360 a central bank says, actually, you inflation not too bad, 0:06:14.680 --> 0:06:17.040 We'll just stay and hold. So what I'm trying to 0:06:17.080 --> 0:06:19.919 say is it really varies from central bank to central 0:06:19.920 --> 0:06:23.239 bank in terms of how high's inflation. There are certain 0:06:23.240 --> 0:06:26.520 central banks are more worried about the currency being under pressure. 0:06:27.000 --> 0:06:30.320 So there's no set one rule covers all. 0:06:30.600 --> 0:06:34.279 Say what about the degree of leverage given the raid environment? 0:06:34.360 --> 0:06:36.239 Right now? When you look at the figure one point 0:06:36.279 --> 0:06:39.400 four trillion US, I think that has been levered into 0:06:39.440 --> 0:06:42.360 the equity trade. Doesn't that sound a little alarming? 0:06:43.160 --> 0:06:46.640 Well, I think that we're always worried about equity trades 0:06:46.640 --> 0:06:49.120 because it's a one way train until it's not a 0:06:49.160 --> 0:06:52.560 one way training. And every market, of course, has a 0:06:52.640 --> 0:06:54.560 history of correction. I'm not saying it's not to be 0:06:54.600 --> 0:06:56.560 a big correction, but you know there's a pullback. I 0:06:56.560 --> 0:06:58.960 mean it's it's quite standard. It's never just by bye bye, 0:06:58.960 --> 0:07:02.240 But you know, the general equity trade sort of has 0:07:02.480 --> 0:07:05.840 been that, and I think any dip has been a 0:07:05.839 --> 0:07:08.720 sign of just buy into it. I mean, I think 0:07:08.760 --> 0:07:11.600 for this equity trade to change, you need something really 0:07:11.640 --> 0:07:15.440 really fundamental to change on the growth outlook. And then 0:07:15.480 --> 0:07:17.840 if you go back to the COVID days, I mean 0:07:17.880 --> 0:07:20.720 obviously that was a fundamental change. Do just worries about 0:07:20.720 --> 0:07:23.720 the growth global growth? About question? And I think at 0:07:23.720 --> 0:07:27.200 the moment you're seeing, well, you know, everything's going well. Yes, 0:07:27.360 --> 0:07:31.800 in certain areas like the AI, is that overheating a 0:07:31.840 --> 0:07:33.400 bit or has it got a bit of it ahead 0:07:33.400 --> 0:07:37.280 of itself. That's obviously an ongoing debate, particularly the money 0:07:37.280 --> 0:07:39.680 expenditure on data centres, et cetera. 0:07:39.720 --> 0:07:41.120 It's getting higher and high and higher. 0:07:41.520 --> 0:07:43.760 But traders will say, look at the end of the day, 0:07:43.880 --> 0:07:46.200 trenders your friend, and I think there's a lot of 0:07:46.240 --> 0:07:49.840 fomo at the moment as well. So you know, at 0:07:49.840 --> 0:07:51.800 the moment, I think people look and let's I see 0:07:51.800 --> 0:07:55.760 a fundamental reason to change my stance, which at the moment, 0:07:55.800 --> 0:07:58.000 no one's really seen that You're going. 0:07:58.240 --> 0:07:59.760 I think, just it's higher. 0:08:00.720 --> 0:08:03.360 Over the weekend, we had the assessment from the Bank 0:08:03.440 --> 0:08:07.840 of International Settlements, its annual report was published, I believe 0:08:07.840 --> 0:08:11.600 on Sunday, and the BIS was talking about an AI bust, 0:08:11.880 --> 0:08:15.560 higher inflation, also a thread and fiscal stress. When I 0:08:15.600 --> 0:08:19.960 consider those different elements, it seems like maybe in inflation 0:08:20.160 --> 0:08:24.160 surprise something that remains maybe beyond sticky. Maybe that we 0:08:24.280 --> 0:08:28.240 see some type of move higher in inflation and it 0:08:28.320 --> 0:08:31.440 is not necessarily driven by the oil trade. Could that 0:08:31.520 --> 0:08:32.679 shock markets? 0:08:33.160 --> 0:08:35.800 I think it could, But I think that debate, the 0:08:35.880 --> 0:08:41.160 AI debate spur inflation has been discussed and has been discussed, 0:08:41.200 --> 0:08:43.560 so I mean, I think it's something the markets are 0:08:43.720 --> 0:08:46.880 aware of. I do think at the moment though, the 0:08:46.880 --> 0:08:49.200 market's like, look, hey, if the glass is half empty 0:08:49.280 --> 0:08:52.240 or half full, it's definitely half full. And therefore were 0:08:52.400 --> 0:08:55.200 upwards and you know, not saying to infinity and beyond, 0:08:55.640 --> 0:09:00.280 but certainly upwards in the near term. So they are 0:09:00.360 --> 0:09:03.920 wary of those potentials. But it's not enough at the 0:09:04.000 --> 0:09:08.040 moment to derail the general trend that's going on. I said, 0:09:08.040 --> 0:09:11.760 I think they need something a lot more fundamental then, 0:09:12.040 --> 0:09:14.280 because we've had let's be honest, we've had elevated inflation 0:09:14.400 --> 0:09:17.319 for certainly in the US or UK or whatever country 0:09:17.320 --> 0:09:19.480 you will look at for a few years now. 0:09:19.640 --> 0:09:21.200 So that hasn't derailed this market. 0:09:21.280 --> 0:09:25.560 So you go, well, if it just stays elevated, you 0:09:25.640 --> 0:09:28.120 go okay. I mean, yes, the Fed may hike more, 0:09:28.200 --> 0:09:30.560 such ways may hike more, but again those already been 0:09:30.600 --> 0:09:35.280 factored in. So unless there's suddenly a very very aggressive 0:09:36.160 --> 0:09:40.400 hiking cite tal, that's not being factored in. I don't 0:09:40.440 --> 0:09:43.640 see anything fundamentally change at the moment. But the market's 0:09:43.640 --> 0:09:46.280 has taken all relative in its stride at the moment, 0:09:46.320 --> 0:09:49.200 so you need something very very different from what's being 0:09:49.240 --> 0:09:52.520 perceived at the moment to really really shock the market. 0:09:53.000 --> 0:09:54.480 And I said, look, I'm not saying there won't be 0:09:54.480 --> 0:09:57.240 any pullbacks. I think that would be not correct to 0:09:57.240 --> 0:09:59.720 think there'll be some pullback. But again, reality is at 0:09:59.720 --> 0:10:02.000 the moment the market goes, that's just an opportunity to 0:10:02.040 --> 0:10:02.680 buy certain in. 0:10:02.720 --> 0:10:05.679 Equities, certainly for a while. I mean that exagen a 0:10:05.800 --> 0:10:08.840 shock was provided by geopolitics, right and that may have 0:10:08.920 --> 0:10:11.040 caught the market a little flat footed at the end 0:10:11.080 --> 0:10:14.920 of February when we had the US and Israel attacking Iran. 0:10:15.800 --> 0:10:18.480 That seems to be completely discounted right now. We seem 0:10:18.520 --> 0:10:21.040 to be moving in a direction where things are much 0:10:21.040 --> 0:10:24.199 more relaxed. Now we're working towards some type of peace deal. 0:10:24.760 --> 0:10:27.000 The market doesn't seem to be as concerned about that 0:10:27.040 --> 0:10:28.080 situation right now. 0:10:28.520 --> 0:10:29.160 Yeah, it doesn't. 0:10:29.200 --> 0:10:31.760 And I think if you look at the moves that 0:10:31.880 --> 0:10:35.000 you had when the war started, and let's compare that 0:10:35.040 --> 0:10:39.720 to the TRUP liberation day back last year, which seems 0:10:39.760 --> 0:10:42.360 a long time ago now, But like Liberation Day, you 0:10:42.440 --> 0:10:46.240 did see some moves about question following that shock. You know, 0:10:46.280 --> 0:10:48.600 it was a lot bigger when the Talis we announced 0:10:48.720 --> 0:10:51.520 than was expected. The war you sort of saw the 0:10:51.520 --> 0:10:57.160 build up going started because obviously the US naval forces 0:10:57.160 --> 0:10:59.120 were moving into the regions, so we were aware that 0:10:59.160 --> 0:11:02.240 something could happen. Obviously it's gone longer than maybe President 0:11:02.240 --> 0:11:04.400 Trumble or the market so he wants. But again, the market, 0:11:04.400 --> 0:11:06.600 the reality is, the markets got used to it. I mean, 0:11:06.640 --> 0:11:09.839 it's the market adjusts and it gets worried and it goes, Actually, 0:11:09.840 --> 0:11:10.760 you know, it's not as bad. 0:11:11.000 --> 0:11:11.920 It's what I thought it was. 0:11:11.960 --> 0:11:14.680 Oil went up to you know, nearly one hundred and twenty, 0:11:14.880 --> 0:11:17.720 and s Mark's like, oh, we got past that. So 0:11:17.760 --> 0:11:20.880 the market has this little panic attacks and then it 0:11:20.920 --> 0:11:23.320 goes it's actually not as bad as I thought. 0:11:23.360 --> 0:11:24.440 We can keep trying it a. 0:11:24.440 --> 0:11:28.480 Long and certainly now with oil coming off, and look 0:11:29.040 --> 0:11:31.600 with ongoing talks and the tip for tat on the 0:11:31.640 --> 0:11:35.520 strikes between US and Iran and realities, do you honestly 0:11:35.559 --> 0:11:37.439 expect a deal to be done in sixty days? I 0:11:37.480 --> 0:11:40.640 would say no, because history is said that it's very 0:11:40.679 --> 0:11:42.800 much like it will be done. It can can be 0:11:42.880 --> 0:11:45.000 kicked down the road several times, but I think the 0:11:45.040 --> 0:11:47.000 market goes kick it down the road as long as 0:11:47.040 --> 0:11:52.040 it doesn't fundamentally change the economics of global growth and everything. 0:11:52.400 --> 0:11:55.200 Then you know what, We're fine with it. So that's 0:11:55.200 --> 0:11:55.960 what I would say. 0:11:55.800 --> 0:11:58.120 You, all right, listen, I know you're getting ready to 0:11:58.280 --> 0:12:00.720 take some time off. I hope it's a full time, 0:12:00.880 --> 0:12:05.719 RESTful holiday. Bloomberg strategist David finerdid, joining from Singapore here 0:12:05.760 --> 0:12:15.520 on the Daybreak Asia podcast. Welcome back to the Daybreak 0:12:15.520 --> 0:12:19.280 Asia Podcast. I'm Doug Chrisner. The official PMI data for 0:12:19.400 --> 0:12:23.559 China shows factory activity improved in June by more than expected. 0:12:24.080 --> 0:12:27.480 The story is of booming exports offsetting slower growth in 0:12:27.520 --> 0:12:31.360 the domestic economy. Now, the official manufacturing PMI came in 0:12:31.440 --> 0:12:34.640 at a reading of fifty point three. Meantime, the non 0:12:34.679 --> 0:12:39.440 manufacturing PMI measuring activity and construction and services came in 0:12:39.559 --> 0:12:42.560 at a reading of fifty point two. And we got 0:12:42.600 --> 0:12:45.960 reaction from Helen Chow. Helen is the chief economist for 0:12:46.000 --> 0:12:49.360 Greater China at Bank of America Global Research, and she 0:12:49.480 --> 0:12:52.600 spoke with Bloomberg TV host ivon Men and April Hong. 0:12:52.880 --> 0:12:55.760 So it seems like things are improving marginally. But what 0:12:56.040 --> 0:12:57.559 is your takeover all the numbers so far? 0:12:58.200 --> 0:12:59.800 Well, I think generally this is good. 0:13:00.400 --> 0:13:03.240 We're talking about the manufacturing sector, you know, doing a 0:13:03.240 --> 0:13:06.320 little bit better even in a sequential basis. But at 0:13:06.360 --> 0:13:08.680 the same time, I think the non manufacturing side, the 0:13:08.720 --> 0:13:11.760 service side, is also holding up pretty well, so that 0:13:11.800 --> 0:13:16.640 I think at LESA like basically LESA a relatively constructive 0:13:16.679 --> 0:13:20.760 picture for June, and especially at the time when we're 0:13:20.800 --> 0:13:23.280 about to look at at least a second quarter and 0:13:23.320 --> 0:13:26.120 think about whether the policymakers are about to do something. 0:13:27.520 --> 0:13:29.520 So thinks I mean, is it soft enough do you 0:13:29.559 --> 0:13:31.520 think for them to do anything well? 0:13:31.559 --> 0:13:33.840 To be honest, the PMI doesn't really tell the story. 0:13:33.920 --> 0:13:35.840 We have to wait until two weeks later when we 0:13:35.880 --> 0:13:38.360 look at the third quarter data together with the June 0:13:38.440 --> 0:13:42.360 activity growth indicators. At the moment, I think PMI tells 0:13:42.440 --> 0:13:44.640 us that on the supply side things are okay, But 0:13:44.679 --> 0:13:47.480 we already know that. Think about exports, think about IP 0:13:47.760 --> 0:13:50.559 they have been pretty resilient for some time. So the 0:13:50.679 --> 0:13:54.079 question is really on the demand side, consumption and investment, 0:13:54.160 --> 0:13:57.080 as ever just said, and. 0:13:57.080 --> 0:14:00.200 So what are we tracking here in terms of this 0:14:00.280 --> 0:14:02.520 case shaped, I mean, it seems like out of all 0:14:02.559 --> 0:14:05.040 the economy that we talk about, you're seeing it much 0:14:05.080 --> 0:14:09.520 more wider. This k of an economy. Is the macro 0:14:09.600 --> 0:14:12.080 story that we're seeing, you know around Asia? Is it 0:14:12.080 --> 0:14:14.360 really only about AI and semis? How do you look 0:14:14.400 --> 0:14:15.760 at the non sort of tech sector. 0:14:16.559 --> 0:14:19.440 Well, it's probably different from the market. I think the 0:14:19.440 --> 0:14:23.120 market only cares about the A and the related parapheral sectors. 0:14:23.520 --> 0:14:28.400 But actually for em Asia we're looking at basically growth diverging. 0:14:28.840 --> 0:14:30.720 So the front runners. 0:14:30.320 --> 0:14:35.000 Are the text exports exporters such as Taiwan and also Korea, 0:14:35.720 --> 0:14:38.080 a little bit of Japan and China as well. But 0:14:38.280 --> 0:14:40.880 at the same time we also have the other sectors, 0:14:40.920 --> 0:14:43.760 the other countries, for example those in Southeast Asia and 0:14:43.800 --> 0:14:46.520 in South Asia that struggle a little bit because they 0:14:46.520 --> 0:14:50.440 are more domestic demand oriented and they also you know, 0:14:50.640 --> 0:14:53.200 relies more on imports of energy. 0:14:53.400 --> 0:14:54.320 And now with. 0:14:54.400 --> 0:14:58.160 Oil prices still relatively elevated, hopefully in the near future 0:14:58.280 --> 0:15:01.120 is coming down a little bit further, they are seeing 0:15:01.160 --> 0:15:04.280 more struggle in terms of the growth pressure at the 0:15:04.320 --> 0:15:06.320 time when inflation is about to edge. 0:15:06.240 --> 0:15:12.120 Up on oil. I mean, what was interesting was how 0:15:12.520 --> 0:15:15.880 it came out that the oil demand, the imports for 0:15:16.040 --> 0:15:19.400 China was not as high as some maybe had expected 0:15:19.800 --> 0:15:22.640 amid the war. What is your sense of what is transient. 0:15:22.720 --> 0:15:28.080 What is structural in these energy shifts within China. 0:15:28.480 --> 0:15:32.440 Well, I think the oil prices staying at elevated levels 0:15:32.480 --> 0:15:36.680 are presenting some growth challenges not only to China but 0:15:36.760 --> 0:15:39.440 also the rest of the Asia in general. But for China, 0:15:39.520 --> 0:15:42.400 I think it is better prepared because of the following reasons. 0:15:42.720 --> 0:15:46.200 Number one, it has a large strategic reserve so that 0:15:46.240 --> 0:15:49.400 they can draw upon when things are getting hard. And two, 0:15:49.440 --> 0:15:54.440 they also have more diversifieds origins or sources of energy 0:15:54.640 --> 0:15:58.360 and therefore they are less impacted by GCC country issues 0:15:58.400 --> 0:16:02.880 and the transportation through the straight up hormos. But number 0:16:02.880 --> 0:16:05.760 three I think also very importantly, China has developed a 0:16:05.760 --> 0:16:09.760 lot of renewable energies in the recent past, so you know, 0:16:09.880 --> 0:16:12.880 I would say that is contributing a lot to the 0:16:13.360 --> 0:16:17.280 more diversified energy demand that China currently has. So we 0:16:17.320 --> 0:16:19.960 are about to see that when oil prices come down, 0:16:20.040 --> 0:16:22.840 it will help China, you know, get inflation a little 0:16:22.840 --> 0:16:27.040 bit lower, especially coming from the energy part. We need 0:16:27.040 --> 0:16:30.120 the good inflation, not the energy inflation, right. But at 0:16:30.120 --> 0:16:32.840 the same time, you know, in addition to that terms 0:16:32.880 --> 0:16:37.000 of trade gain, we're also seeing that China could potentially 0:16:37.680 --> 0:16:38.720 you know, see a little. 0:16:38.520 --> 0:16:40.760 Bit of upside for corporate and. 0:16:40.680 --> 0:16:44.040 Also for household when the energy prices are lower, so 0:16:44.080 --> 0:16:45.600 that demand can recover better. 0:16:47.280 --> 0:16:47.680 What do you. 0:16:47.640 --> 0:16:50.400 Think needs to happen for that to be that good? Inflation? 0:16:50.960 --> 0:16:54.560 How are you assessing so far their drive to rebalance 0:16:54.600 --> 0:16:56.520 the economy drive domestic demand? 0:16:58.800 --> 0:17:01.480 The key is to see the gap between supply and demand. 0:17:01.560 --> 0:17:05.600 At the moment, supply is relatively resilient, as we just mentioned, 0:17:06.040 --> 0:17:09.240 and that's particularly supported by external demand rather than the 0:17:09.280 --> 0:17:13.440 MESSA demand. But if we can get the MESSA demand back, 0:17:13.560 --> 0:17:17.560 especially on the investment side, because it's faster investment that 0:17:17.600 --> 0:17:20.120 has a higher volatility compared to consumption. 0:17:20.560 --> 0:17:22.120 So our hope is. 0:17:22.080 --> 0:17:23.919 That we can see a little bit better fixed As 0:17:23.960 --> 0:17:26.480 at investment, we still hold the view that for the 0:17:26.600 --> 0:17:29.240 full year fixeds that investment growth can be as high 0:17:29.320 --> 0:17:32.480 as two percent in average, And. 0:17:32.560 --> 0:17:34.480 In terms of your growth forecast you still think four 0:17:34.480 --> 0:17:36.280 and a half percent for this year. 0:17:37.040 --> 0:17:39.160 It's really going to be driven by exports. You still think. 0:17:39.000 --> 0:17:42.439 Mostly we were holding very high hopes for rebalancing, but 0:17:42.560 --> 0:17:45.520 that hope has dashed and we're now saying that it's 0:17:45.600 --> 0:17:48.440 mostly driven by exports, and the export growth this year 0:17:48.480 --> 0:17:51.000 can be as high as fifteen percent phenomenal. 0:17:50.600 --> 0:17:53.640 Term, when can we hear I mean you're saying, obviously 0:17:53.680 --> 0:17:56.160 with the supply side still looking struct exports look construct 0:17:56.480 --> 0:17:59.000 that it could actually delay this whole next round of 0:17:59.040 --> 0:18:01.400 stimulus from the government. Is a pull up your meeting 0:18:01.400 --> 0:18:03.359 in July going to be a good catalyst or at 0:18:03.440 --> 0:18:06.000 least an opportunity to look at measures there or do 0:18:06.040 --> 0:18:07.600 we have to wait a few months, as you say, 0:18:07.600 --> 0:18:08.640 maybe more data sets? 0:18:08.840 --> 0:18:09.440 Good question. 0:18:10.160 --> 0:18:13.360 I think the key depends on what the numbers we're 0:18:13.359 --> 0:18:16.080 going to see in two weeks. First, So if by 0:18:16.200 --> 0:18:18.960 June mid mid July we're looking at the June numbers 0:18:19.240 --> 0:18:23.280 with a substantial contraction of fixcess and investment growth continuously 0:18:23.320 --> 0:18:27.520 into June, and with retail sales numbers still in negative 0:18:27.800 --> 0:18:30.720 territory in yar on year growth terms, I think that 0:18:30.920 --> 0:18:33.960 probably will prompt the policy makers do a quite a 0:18:34.000 --> 0:18:37.320 bit more. And are we going to see the second 0:18:37.400 --> 0:18:40.520 quarter data surprising on the downside to below four point five? 0:18:40.760 --> 0:18:42.359 Probably not. I think we still have. 0:18:42.359 --> 0:18:45.480 That, you know, at this level, and therefore, are they 0:18:45.520 --> 0:18:48.399 going to actually pull out some big cannons and you know, 0:18:48.520 --> 0:18:50.800 really use a lot of ammunition in the near term. 0:18:51.440 --> 0:18:54.760 I actually am skeptical because at the moment we are 0:18:54.840 --> 0:18:58.520 still you know, basically going into the second quarter against 0:18:58.520 --> 0:19:01.040 the first quarter five point zero against last year five 0:19:01.040 --> 0:19:02.520 point zero, and what. 0:19:02.560 --> 0:19:03.359 Is the urgency. 0:19:03.640 --> 0:19:06.520 I think that they need to see a significant you know, 0:19:06.600 --> 0:19:09.439 deceleration before they actually pull out the big guns. 0:19:11.359 --> 0:19:15.240 So does that mean for monetary policy you don't see 0:19:16.040 --> 0:19:18.360 that much in the way of easing potentially as well, 0:19:18.440 --> 0:19:19.280 is there a need for that? 0:19:21.520 --> 0:19:23.800 I certainly think that there is a need for that. 0:19:23.920 --> 0:19:27.440 I do believe that, you know, more policy easing is needed, 0:19:27.520 --> 0:19:30.119 including both on the monitoring terms as well as a 0:19:30.119 --> 0:19:33.160 fiscal But we're not placing very high hopes of an 0:19:33.160 --> 0:19:37.720 immediate policy change just because that we think policy makers 0:19:37.960 --> 0:19:41.480 you know, will take time to assess how bad the 0:19:41.600 --> 0:19:44.679 deceleration will be and how much of support the mesode 0:19:44.680 --> 0:19:48.360 demand will need, and therefore we're not expecting an interestry 0:19:48.359 --> 0:19:51.000 cut in the very near future. But that said, we 0:19:51.119 --> 0:19:54.080 certainly think that going into the second half, the risks 0:19:54.160 --> 0:19:57.359 are that exports decelerates, you know a little bit further, 0:19:57.720 --> 0:20:00.480 and if that is the case, then policy makers in 0:20:00.560 --> 0:20:03.919 China will clearly see more urgency in terms of rolling 0:20:03.920 --> 0:20:06.200 out more policy easing, stepping ups. 0:20:07.040 --> 0:20:10.080 This whole overnight reverse repob and there's so much questions 0:20:10.119 --> 0:20:12.320 about them, why didn't they disclose the rate? They unveil 0:20:12.400 --> 0:20:14.800 this new tool, But then, you know, what can we 0:20:14.840 --> 0:20:17.320 read from that here? Are they really shifting more to 0:20:17.359 --> 0:20:20.240 the short end of of you know, interest rates and 0:20:20.320 --> 0:20:22.960 whatnot and make it more aligned with central banks around 0:20:22.960 --> 0:20:23.880 the world, or do you think? 0:20:24.560 --> 0:20:26.720