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Speaker 1: Let's get to our guest. Wang shan Hu is with us,

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Speaker 1: a global head of asset management at High Tong International,

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Speaker 1: joining us from our studios in Hong Kong. Wang shan Hu,

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Speaker 1: thank you so much for being with us. I think

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Speaker 1: we have to agree that the US has an inflation problem.

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Speaker 1: It's going to lead to much tighter financial conditions. US

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Speaker 1: rates are moving higher. We know that conversation now is

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Speaker 1: at a terminal rate could get to five. Do you

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Speaker 1: think the dollar is going to get a lot more

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Speaker 1: UM stronger from levels that we have seen currently. Well, Uh,

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Speaker 1: my sense is that the market is get used to

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Speaker 1: um a near turn rapid fat rate hike even towards

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Speaker 1: the terminal rate. So the dollar going to be continued

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Speaker 1: to support it by the high interest rate in the US,

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Speaker 1: and it may last for a while. But I think

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Speaker 1: that when the market realized that the fat gonna reach

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Speaker 1: the endpoint, for example in the next twelve months, and

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Speaker 1: then the market the react earlier to that, it's gonna

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Speaker 1: help soften the dollar strengths. We'll also looking very closely

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Speaker 1: in terms of the reaction to China as we look

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Speaker 1: ahead to the China Party Congress, and that is as

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Speaker 1: you're saying policy easing against the FED tightening. What kind

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Speaker 1: of I guess further policy stimulus you're expecting from China authorities. Mhm.

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Speaker 1: China has been doing both monetary easing and physical easing

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Speaker 1: in this year. Well. The monetary easing, as we can

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Speaker 1: see from the credit growth is that the for household

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Speaker 1: credit grows is still weak, but we have seen the

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Speaker 1: latest number in September that UM the corporate loan growth

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Speaker 1: has been rising, which shows that the government's is trying

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Speaker 1: to support the corporates, including the real estate companies in

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Speaker 1: this situation. On physical easing, I expect well for the

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Speaker 1: Party Congress, it won't discuss near term policies. It's more

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Speaker 1: on the long term for example five year Growth Agenda

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Speaker 1: and the policy agenda. But the physical any physical stimulus

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Speaker 1: so far this year will be further constrained by the

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Speaker 1: local government that burdens and also the physical decline of

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Speaker 1: physical revenues UM so far this year. We're going to

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Speaker 1: get some CPI data for China in a short while

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Speaker 1: from now. Give me your sense on on what inflation

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Speaker 1: is like on the mainland. Inflation is still quite low.

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Speaker 1: It's around two in both UM headline and the CPI

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Speaker 1: and the core inflation, unlike in the in the US,

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Speaker 1: is largely boost by commodity prices because China. In China

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Speaker 1: the largest component is food instead of energy, and for food,

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Speaker 1: the the in China still have relatively balanced supply and

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Speaker 1: demand in that component. And also the housing price under

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Speaker 1: pressure or in the last for twenty four months. So

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Speaker 1: I don't expect the inflation pressure in China gonna come

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Speaker 1: anytime soon. So a thirty second day they're of a

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Speaker 1: stronger than expected. You unfixed. What kind of balance are

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Speaker 1: you saying from the PBOC in terms of the need

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Speaker 1: to ease and also the appreciation pressure of the currency.

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Speaker 1: Well for the currency, the like many other currencies, the

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Speaker 1: Chinese remmy be has been under depression pressure this year

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Speaker 1: given the very strong dollar. And we mentioned that the

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Speaker 1: PBUC continue to give stimulus or financial support to to

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Speaker 1: the to the domestic economy. Well, I think the next

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Speaker 1: task or important consideration is that it has to balance

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Speaker 1: the pace of depressiation versus the domestic find monetary easing.

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Speaker 1: I think they're getting the balance relatively stable and try

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Speaker 1: to manage expectations on one way. Depressure is and uh,

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Speaker 1: down the road. I think that's what they try to

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Speaker 1: do now. One of the things that could spell trouble

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Speaker 1: for the Chinese economy overall is the move by the

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Speaker 1: Biden administration to restrict Chinese companies from having advanced chip

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Speaker 1: making equipment or employing American citizens without getting a license beforehand.

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Speaker 1: And I'm wondering whether or not this is a cause

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Speaker 1: of concern for you, and whether or not it causes

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Speaker 1: you maybe to resist in putting money to work in

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Speaker 1: in Chinese technology companies, whether they be in any way

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Speaker 1: connected to the chip making environment or or something like

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Speaker 1: an auto manufacturer that's heavy heavily reliant on chips m

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Speaker 1: hm um. First of all, I think this is definitely

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Speaker 1: a nective news to the Chinese chip production industry in

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Speaker 1: terms of long term development and the KAPPAC spending, and

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Speaker 1: as we can see from two days ago, also the

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Speaker 1: the Bien administration Aasians the national security strategy that for

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Speaker 1: the next decade the priority is to outcompete China. So

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Speaker 1: the the U S Chip Act and the recent band

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Speaker 1: on the UM on the on the chip industry, on

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Speaker 1: the equipment exports is only another step to to be

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Speaker 1: consistent with list agenda. Well, unfortunately we are in this

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Speaker 1: situation that China and the US or US has to

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Speaker 1: decide to to outcompete China for the next decade. But

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Speaker 1: my hope is that in the five years term. UH.

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Speaker 1: First of all, there there's some foreign companies get one

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Speaker 1: year exemption for example Sensor and t smc UM, so

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Speaker 1: that in the short term the situation is still okay.

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Speaker 1: And my hope is that in the in the longer term, UH,

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Speaker 1: for example, on the Chinese side, they continue to UH

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Speaker 1: to increase capax spending and self sufficiency UM in the

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Speaker 1: chip industry, and also the China and the US can

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Speaker 1: finally find some solution to you to have a better

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Speaker 1: outcome too for a cooperative manner. So much pressure on

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Speaker 1: the developers. But you did see a little bit of

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Speaker 1: a rebound in Hong Kong trade yesterday, and that was

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Speaker 1: also on a Bloomberg report about h the city's government

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Speaker 1: considering cutting property tax for nonresident buyers. When you look

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Speaker 1: at the property sector in both Hong Kong and China,

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Speaker 1: are there some some more opportunities for three? Well, I

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Speaker 1: think the real estate market is still searching for a

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Speaker 1: bottom at this moment, and I don't see a strong

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Speaker 1: rebound or upside potential for the next two months. The

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Speaker 1: reason is that first of all, Hong Kong is also

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Speaker 1: facing a rising interest rate environment along with the US

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Speaker 1: rate hikes because the Hong Kong dollar packing regime. And second,

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Speaker 1: under the current COVID measures, even Hong Kong has reopened

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Speaker 1: the they travel to mainland, also the mainland tourists or

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Speaker 1: investors that are still very restrictive. So in this situation,

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Speaker 1: I don't think the demand gonna pend up and to

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Speaker 1: support or at the real estate market, including the rental market,

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Speaker 1: all right, great to have you with us, and you've

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Speaker 1: got to run to TV as well. Sankji Wang, Global

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Speaker 1: head of Asset Management at Higtong International with us in

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Speaker 1: our Hong Kong studio