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Speaker 1: Let's get to Trenin. Who's e M Asia. Senior economist

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Speaker 1: at natixis Trent. It's pretty bearish out there, you know,

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Speaker 1: slowing growth in the US and an aggressive fed the

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Speaker 1: energy crisis in in Europe and China doing what it's doing.

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Speaker 1: It almost feels like, you know, there's too many people

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Speaker 1: getting on one side of the boat. Are we there yet? Well?

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Speaker 1: I think it's UM. You know, it's bearish in the US,

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Speaker 1: but not enough to soften the dollar, right because the

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Speaker 1: I s M is still very strong. So I think

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Speaker 1: the issue here when you look at Asian effects weakening UM,

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Speaker 1: we forget that actually quite a few economies are quite

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Speaker 1: resilient UM. Obviously if you're very linked to a slowing

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Speaker 1: global cycle, particularly UM goods that people are trading UM

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Speaker 1: because there you know, we have a cost of living

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Speaker 1: crisis globally UM such as electronics, and then you're not

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Speaker 1: going to do as well. So we're talking about Japanese exports,

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Speaker 1: Karine exports UM and to even Chinese exports very likely

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Speaker 1: to soften in the months ahead, but other countries are

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Speaker 1: doing pretty well in Asia and even with the shocks.

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Speaker 1: So we're talking about Southeast Asia, particularly Indonesia, which has

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Speaker 1: a positive return to its stock market even with the

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Speaker 1: global bear uh you know, market blooming. Yeah, you say Indonesia.

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Speaker 1: We've sworn to you before about the fact that you

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Speaker 1: see some upside to for for Vietnam. What kind of

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Speaker 1: movement are we seeing in terms of foreign investment into

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Speaker 1: some of these markets. If you look at the p

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Speaker 1: m S recently, the manufacturing PMI, there's an acceleration of

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Speaker 1: manufacturing p m I in Vietnam and Indonesia and Thailand.

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Speaker 1: Across Southeast Asia there's an acceleration and also even services

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Speaker 1: for India. UM and the resilience of these countries UM

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Speaker 1: to your point, is due to the fact that investment

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Speaker 1: is surging. UM. In Indonesia you have the highest FDI

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Speaker 1: influence in the first half UM into mining's medals, but

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Speaker 1: not just that into its domestic economy like I C, T,

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Speaker 1: telecom and so on and so forth. UM IT it's

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Speaker 1: a testament to the fact that um A demand there

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Speaker 1: is pretty strong because of normalization b UM there is

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Speaker 1: a global push to diversify too much concentration risk in China,

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Speaker 1: and so you have rising investment that helps buffer the

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Speaker 1: decline of demand. So you have these these new increase

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Speaker 1: of shipprints and Vietnam UM is also very attractive for manufacturing.

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Speaker 1: So Indonesia is attractive for energy, for the ongoing crisis

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Speaker 1: and for the reshuffling of the energy transition to e

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Speaker 1: V because as the largest production of nickel and also

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Speaker 1: the largest reserves, and it has policy to make sure

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Speaker 1: that FDI goes there with the band on nickel or

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Speaker 1: and and could likely the tax on process um. So

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Speaker 1: for Vietnam it's a different ball game. You go for

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Speaker 1: the big issue. Yeah, the big issue I would think

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Speaker 1: is that you know, you're saying that we could get

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Speaker 1: more negative in the US and they could start discounting recession.

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Speaker 1: If you get a recession in the U S, you

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Speaker 1: probably get a global recession. And then do you really

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Speaker 1: want to be selling commodity And he's into that absolutely.

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Speaker 1: You still have an energy crisis in Europe and I

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Speaker 1: think that's a big uncertainty. Right. So the softness of

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Speaker 1: AGNEC a lot of commodities, particularly the base metals have

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Speaker 1: softened a lot. And when base metals soften, UM, we

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Speaker 1: you know you see soft thing demand in China and

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Speaker 1: so on and so forth. But coal is still very

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Speaker 1: much likely to be in demand, and that's where Indonesia

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Speaker 1: is still exporting a lot of it, and we're probably

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Speaker 1: going to see a lot of transitioning into that um

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Speaker 1: so necessary if we're running out of Russian gas with

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Speaker 1: Europe right um, so there's a bid for that still um.

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Speaker 1: You know, in places like Vietnam, there's a big concern

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Speaker 1: that if there's this global softening and it has exports

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Speaker 1: as a share of GDP above, should we worry about

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Speaker 1: Vietnamese exports And so far you see slowing down across Asia,

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Speaker 1: but not yet in Vietnam because of the investment increase

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Speaker 1: that we've discussed. We need to get your thoughts here

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Speaker 1: on this incredibly strong fix in terms of the bias

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Speaker 1: from the PBOC and and what they're really trying to

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Speaker 1: do here to stem the wants to climb. Well, I

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Speaker 1: think monetary policy divergence is really stumming from very weak

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Speaker 1: growth in China right um. The lockdown news will continue

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Speaker 1: um uh and and I think markets are looking forward

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Speaker 1: to at some point this will ease. But while that

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Speaker 1: with a strong dollar, um. The PBOC is doing everything

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Speaker 1: in Canta signal it's supporting the yuan but monetary policy

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Speaker 1: divergence with the dollar will continue to put pressure on it.

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Speaker 1: But how concerned are you about geopolitical relations? We've seen

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Speaker 1: a lot of policy this year that runs a little

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Speaker 1: bit counter to what we've seen in the past from China.

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Speaker 1: But are are you concerned about US China relations? The

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Speaker 1: US China relations, there were some hope that when we

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Speaker 1: have a new president it would change, but actually has

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Speaker 1: continued to deteriorate, particularly after the Russian invasion of Ukraine.

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Speaker 1: So it has moved not just US China attentions, but

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Speaker 1: increasingly West VERSUS China attentions. And I think you're seeing

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Speaker 1: that in investment flows um FDI those um into Southeast

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Speaker 1: Asia and India, not just by the West North Asians,

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Speaker 1: but also Chinese investor hedging this geopolitical risk that they

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Speaker 1: expect to continue into the future, particularly um after uh

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Speaker 1: Re election of a president of Jampain. And I think

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Speaker 1: even that the the the there isn't any hope that

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Speaker 1: pensions would ease UM and as a result of that,

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Speaker 1: you will continue to hedge for this risk, whether or

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Speaker 1: not it's on the supply side, on the demand side,

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Speaker 1: particularly it's China also moves up the value chain, right,

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Speaker 1: So it isn't just geopolitical tensions, but is China really

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Speaker 1: a place where you abotage costs anymore? Or is it

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Speaker 1: increasingly a competitor for Germany, for South Korea? With Japan

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Speaker 1: and South Korea particularly UH the administration is very clear

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Speaker 1: that the trade cell plus they see with China is

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Speaker 1: diminishing and they see that to be a threat, um

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Speaker 1: and so on. As a result, I think geopolitic will

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Speaker 1: continue to dominate, not just a short term the longer term,

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Speaker 1: and you're seeing that in Portfolio closed and FDI clos.

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Speaker 1: Does the Party Congress change things for the outlook of

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Speaker 1: for China? Are we going to see some kind of

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Speaker 1: easing away from COVID zero? And if that is the case,

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Speaker 1: then does that become a more attractive story? I think

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Speaker 1: the saying is now dynamic zero right um, And I

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Speaker 1: think some would interpret that it's hard to get it

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Speaker 1: down to zero given how infectious it is. And of

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Speaker 1: course the policies are still in place, but some are

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Speaker 1: hoping that November would be a change. But the question

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Speaker 1: is the delta of the changes are going to be

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Speaker 1: from zero to endemic or is it going to be

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Speaker 1: from zero to dynamic zero, right, with some kind of

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Speaker 1: restrictions still in place. If that's the case, then um,

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Speaker 1: you may have explored um and and certainly if you

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Speaker 1: look at China growth, it has been driven by the

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Speaker 1: external sector, really the rebound of the rest of Asior,

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Speaker 1: the rebollon of the U S and even the EU

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Speaker 1: with all the Zuma gloom, still has a pretty good

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Speaker 1: first half. So you know what a Chinese domestic demand.

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Speaker 1: Is it going to be slightly better? Likely is it

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Speaker 1: going to be significantly better? That is the question because

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Speaker 1: right now sentiment is very low due to the lockdowns

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Speaker 1: and and and also other sectors. Right. We heard China's

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Speaker 1: ambassador to Australia make an unusual comment last night. He

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Speaker 1: said that President Shi Jinping has broad support for more

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Speaker 1: time in office. Are you hearing anything about questions about

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Speaker 1: president She's rain Um. Well, I'm not a political scientist

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Speaker 1: that I can projecture on the future of director, feature

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Speaker 1: of policies and and and also his his his hold

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Speaker 1: in power in China. But one thing I would say

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Speaker 1: is if he he has consolidated power and if he's

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Speaker 1: successfully continue he will continue his mandate. Right, And if

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Speaker 1: you have to look at what his mandates so far. Um.

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Speaker 1: The question we have to ask is that will that

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Speaker 1: a ease two political tensions? Will that be very helpful

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Speaker 1: for investors in long term? Sir Truma Canna have to

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Speaker 1: leave it there, but thanks as always trin you. An E. M. Asia,

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Speaker 1: senior economist at natoxis on the line from Hong Kong

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Speaker 1: forest here on Daybreak. Asia