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Speaker 1: Let's get to James Choo, our guest. He is Southeast

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Speaker 1: Asia ce IO at HSBC Global Private Banking and Wealth

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Speaker 1: on the line from Singapore. James, thanks for being with us.

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Speaker 1: So yesterday out of China was the week data and

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Speaker 1: today the PBOC back newspaper Financial News is saying China

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Speaker 1: needs to do more to adopt a policy tools to

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Speaker 1: boost growth. Are we at a critical point here on

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Speaker 1: the mainland? Yeah? Well, I think generally what we're seeing

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Speaker 1: is a slow down in economic momentum in mainland China,

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Speaker 1: whether it's on the domestic consumption front or even externally

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Speaker 1: when it comes to exports um. So I think from

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Speaker 1: that perspective you're going to see much more easing of

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Speaker 1: monetary policy to support growth. And I think that's gold

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Speaker 1: I need to be the trend um going forward in

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Speaker 1: the weeks and months ahead. What does it mean though

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Speaker 1: for assets in China. I mean we've seen this weakness

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Speaker 1: in the Iwan China bonds rallying, and then of course

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Speaker 1: people saying, look, you can still see upsideing equities even

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Speaker 1: if the momentum in the economy is slow. What's your view, Well,

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Speaker 1: we are neutral on Chinese equities right now because of

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Speaker 1: multiple head winds. Uh, we're seeing a slowdown in in

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Speaker 1: industrial production, weakness in property market, and also very uncertain

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Speaker 1: project trajectory when it comes to consumption. But of course

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Speaker 1: what we have also is that there is policy support

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Speaker 1: when it comes to monetree easing, when it comes to

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Speaker 1: perhaps even much more infrastructure spending going to the second

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Speaker 1: half of this year. So there are some teams in

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Speaker 1: China longer term teams particularly aligned with the investment led

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Speaker 1: a recovery that could happen in the second half of

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Speaker 1: this year, whether it's to do with the transition to

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Speaker 1: a green economy or even technological upgrades within China. So

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Speaker 1: I think it's a new once approach. We are neutral

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Speaker 1: on China right now, and I think one has to

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Speaker 1: be um cognizant of some of the macro hiad winds

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Speaker 1: in the short term. So neutral on China. James very

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Speaker 1: quickly thirties A concerts. So are there are other markets

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Speaker 1: in the apack that you're positive on right now? Well, actually,

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Speaker 1: we like Thailand really on the back of recovery when

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Speaker 1: it comes to global travel and domestic consumption. We also

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Speaker 1: like Hong Kong market really on the back of valuation

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Speaker 1: and also at the margin some reopening so and of

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Speaker 1: course the consumption recovery stories. So I think these are

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Speaker 1: the markets that we like. Let's look ahead to the

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Speaker 1: Fat Minutes that we're getting this week signs, of course,

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Speaker 1: of what the Fed is watching to drive the September decision.

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Speaker 1: Do you consider that they are going to continue to

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Speaker 1: raise rates aggressively or are we going to actually see

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Speaker 1: inflation come down gradually and do a lot of their work. Yeah, well,

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Speaker 1: I think the Fat minutes will be closely watched, especially

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Speaker 1: to see what the Federal is things about the economic outlook,

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Speaker 1: as well as particularly on inflation, because in many ways,

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Speaker 1: um uh you there is also a difference in inflation

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Speaker 1: in which service inflation, particularly from wages and rents, are

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Speaker 1: still very high. So I think that that's crucial to

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Speaker 1: shed more light on on what the Fat things about

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Speaker 1: that because crucially, whether we do get a peaking of inflation,

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Speaker 1: I think the minutes will be closely watched in that respect.

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Speaker 1: But I think by and large it's premature to kind

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Speaker 1: of think that the fat would uh kind of a

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Speaker 1: pivot towards cutting rates um uh any time soon. So

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Speaker 1: I think that's really because inflation, particularly service in vision,

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Speaker 1: is still very very sticky. I'd like to get your

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Speaker 1: take on what's happening in Japan. Yesterday we had the

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Speaker 1: GDP number. It indicates that basically the economy has recovered

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Speaker 1: to its pre pandemic size, or it did so in

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Speaker 1: Q two a growth rate of two point two percent

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Speaker 1: that's annualized. It missed the mark, but this is a

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Speaker 1: preliminary read. I get that too. But what was equally

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Speaker 1: perhaps as striking as that the deflator actually increased by

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Speaker 1: one point three percent. The most sense about are you

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Speaker 1: optimistic that maybe they're the worst is over for Japan? Well,

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Speaker 1: I think for Japan it's really still UH kind of

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Speaker 1: a wait and see mode. We are a neutral on

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Speaker 1: Japanese equities right now, really because there are still quite

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Speaker 1: a bit of head winds. Particularly Japan is very exposed

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Speaker 1: to to global growth, and we are seeing a slowdown

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Speaker 1: in the general manufacturing cycle. But lbit, of course Japan

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Speaker 1: can benefit from the Japanese and weakness, so so you

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Speaker 1: you might get some witness in Japan, particularly the export

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Speaker 1: oriented UH companies. But I think on the domestic side

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Speaker 1: of things, and I think even on on the tourism,

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Speaker 1: you might still see a bumpy road ahead. So you

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Speaker 1: talked about some of the markets that you're like in

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Speaker 1: in this part of the region and pops don't like

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Speaker 1: as well. Tell us what you're thinking when it comes

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Speaker 1: to the Europe situation, because of course we'recessionary concerns here

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Speaker 1: are probably even stronger than what we're saying globally. Yeah. Well,

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Speaker 1: I think economic growth globally it's fairly patchy, but I

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Speaker 1: think in terms of Europe's case, there might be much

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Speaker 1: more difficulties compared to uh US or even parts of

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Speaker 1: Asia really because growth momentum is slow and I think

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Speaker 1: inflation it's it's also an issue. So of course policy

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Speaker 1: will be tightening there, and if you think about it,

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Speaker 1: particularly in terms of energy supply, that might become an

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Speaker 1: issue going into the winter months. So I think quite

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Speaker 1: a bit more UH cautious in Europe going forward. Yeah,

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Speaker 1: it's very interesting you make that point because I think

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Speaker 1: Reuter's had a piece saying that German households may have

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Speaker 1: to pay nearly five hundred euros more a year for

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Speaker 1: natural gas given elevated energy prices, but that takes us

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Speaker 1: neatly to crude oil which is down today right now

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Speaker 1: in the electronic session by about one point three percent.

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Speaker 1: Seems as though Iran is optimistic that the two sides

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Speaker 1: may be close to a nuclear deal in Iran and

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Speaker 1: the US. How do you play energy right now? Well,

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Speaker 1: I think, as of now, I would say that largely

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Speaker 1: energy price, particularly oil prices, it's really dependent on on

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Speaker 1: the growth Glober growth outlook, and clearly the Golber growth

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Speaker 1: momentum it is slowing down. But nevertheless, I think there

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Speaker 1: is also some beneficiaries, particularly energy companies that that could

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Speaker 1: could kind of benefit from the high higher oil price generally,

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Speaker 1: and of course many of these energy stocks does give

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Speaker 1: fairly good dividends. James, thank you as always. James to

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Speaker 1: a Southeast Asia CIO at hs b C Global Private

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Speaker 1: Banking and Wealth, joining us from Singapore,