1
00:00:00,080 --> 00:00:02,360
Speaker 1: Much. Let's get to our guest, Selena, see a greater

2
00:00:02,480 --> 00:00:07,480
Speaker 1: China equity research head at Credit Suee Wealth Management. Selena,

3
00:00:07,520 --> 00:00:09,840
Speaker 1: I know you've been looking at geopolitical risks, so I

4
00:00:09,840 --> 00:00:12,800
Speaker 1: want to start off with a question about that China

5
00:00:12,880 --> 00:00:16,560
Speaker 1: only fired missiles after Nancy Pelosi left. Should we take

6
00:00:16,600 --> 00:00:18,840
Speaker 1: that as a as a good thing? I mean, it

7
00:00:19,040 --> 00:00:22,680
Speaker 1: seems to imply that China wants to avoid direct confrontation

8
00:00:23,280 --> 00:00:26,239
Speaker 1: with the US. UM. Should we look at it that way?

9
00:00:26,400 --> 00:00:31,240
Speaker 1: Or is it an overall negative? I would think a

10
00:00:31,400 --> 00:00:34,000
Speaker 1: morning by the way, UM, I would think would take

11
00:00:34,040 --> 00:00:38,960
Speaker 1: it quite mutually. UM. Basically, when there's no direct conflict

12
00:00:39,520 --> 00:00:43,080
Speaker 1: between the States and China, well think that the worst

13
00:00:43,840 --> 00:00:47,599
Speaker 1: que could have been over with the policy visits to Taiwan.

14
00:00:47,960 --> 00:00:52,159
Speaker 1: So we're not too nervous about the situation, UM, and

15
00:00:52,520 --> 00:00:56,840
Speaker 1: we're taking it quite mutually. Actually. UM. At this point, well,

16
00:00:56,920 --> 00:01:00,560
Speaker 1: let's take a look at the economics economic fundaments in China.

17
00:01:00,600 --> 00:01:03,800
Speaker 1: We had that record trade surplus, but the number of

18
00:01:03,880 --> 00:01:05,920
Speaker 1: head winds as well? Do you put an astress next

19
00:01:05,920 --> 00:01:10,360
Speaker 1: to that number? UM? I think that number actually had

20
00:01:10,520 --> 00:01:13,560
Speaker 1: gotten us by surprise on the positively end, So we

21
00:01:13,680 --> 00:01:17,520
Speaker 1: take it quite positively, UM that we would look for

22
00:01:18,240 --> 00:01:21,320
Speaker 1: more data to come through in the next one or

23
00:01:21,360 --> 00:01:25,640
Speaker 1: two months before we turn a very bullish about the situation. UM,

24
00:01:25,760 --> 00:01:29,000
Speaker 1: But we are actually quite positive about the situation UM

25
00:01:29,080 --> 00:01:31,399
Speaker 1: and Extress decided it and we'll look more into the

26
00:01:31,480 --> 00:01:34,839
Speaker 1: data and we'll look more into our forecasts in terms

27
00:01:34,920 --> 00:01:40,440
Speaker 1: of revising our prediction on the export number. You've got

28
00:01:40,520 --> 00:01:43,080
Speaker 1: an interesting comment that you think that COVID lockdowns the

29
00:01:43,120 --> 00:01:49,000
Speaker 1: impact from it are basically priced in defend that we

30
00:01:49,000 --> 00:01:53,680
Speaker 1: were actually seeing some moderating or flexibility in terms of

31
00:01:53,680 --> 00:01:57,880
Speaker 1: the lockdowns these days. Firstly, and we're seeing flights that's

32
00:01:57,920 --> 00:02:01,400
Speaker 1: flying into various cities in China. Of course, there's still

33
00:02:01,440 --> 00:02:04,360
Speaker 1: suspension UM and zero COVID is still going to be

34
00:02:04,400 --> 00:02:08,440
Speaker 1: the major target for the party or the government in China.

35
00:02:08,720 --> 00:02:11,600
Speaker 1: Having said that, we're seeing more flexibility as a whole.

36
00:02:11,919 --> 00:02:15,480
Speaker 1: So especially when we're seeing that the CPI number can

37
00:02:15,520 --> 00:02:19,440
Speaker 1: trend up, that means that the consumer consumption of tolerance

38
00:02:19,680 --> 00:02:23,160
Speaker 1: on price rises are going to be there. So UM,

39
00:02:23,320 --> 00:02:27,919
Speaker 1: we think that firstly, in terms of equity valuation UM

40
00:02:27,960 --> 00:02:32,200
Speaker 1: Hong Kong, the the whole valuation is quite undemanding compared

41
00:02:32,240 --> 00:02:35,680
Speaker 1: to especially the rest of the world, and that's said um,

42
00:02:35,720 --> 00:02:39,520
Speaker 1: I think um. Therefore, the market has taken into account

43
00:02:39,840 --> 00:02:42,840
Speaker 1: um the COVID a lockdown as a whole in mainland

44
00:02:42,880 --> 00:02:46,640
Speaker 1: and also in Hong Kong. Well, you mentioned inflation and China.

45
00:02:46,680 --> 00:02:50,240
Speaker 1: We will have the latest numbers for July out on Wednesday.

46
00:02:50,280 --> 00:02:54,119
Speaker 1: What are you expecting them, um, We're expecting a moderate

47
00:02:54,400 --> 00:02:58,000
Speaker 1: upturn um in a CPI, so we are expecting a

48
00:02:58,200 --> 00:03:02,040
Speaker 1: consumer or the account sumption situation in China to be

49
00:03:02,080 --> 00:03:05,600
Speaker 1: a little bit more positive compared to last month. We

50
00:03:05,680 --> 00:03:08,800
Speaker 1: have a column called China Today on the terminal, which

51
00:03:08,840 --> 00:03:14,000
Speaker 1: is usually quite interesting, and today it features a kind

52
00:03:14,000 --> 00:03:18,040
Speaker 1: of dual trap. Two traps for President Shi Jinping. One

53
00:03:18,080 --> 00:03:21,639
Speaker 1: we've already talked about a little bit. It's the fucidityes

54
00:03:21,720 --> 00:03:26,200
Speaker 1: trap that there will eventually be confrontation between the US

55
00:03:26,280 --> 00:03:29,400
Speaker 1: and China as the US will probably be a falling

56
00:03:29,440 --> 00:03:32,880
Speaker 1: power and China will rise above. That's somewhere down the road,

57
00:03:32,919 --> 00:03:35,760
Speaker 1: and we've chatted about that just momentarily. What about the

58
00:03:35,840 --> 00:03:38,600
Speaker 1: other trap, which he says is a debt trap. It's

59
00:03:38,640 --> 00:03:42,360
Speaker 1: one reason why the PBOC just doesn't really have the

60
00:03:42,520 --> 00:03:49,800
Speaker 1: gumption too really stimulate here UM. I think in fact,

61
00:03:50,080 --> 00:03:54,960
Speaker 1: before the major Communist Party meeting UM that should be

62
00:03:55,000 --> 00:03:57,720
Speaker 1: coming up in the fourth quarter or the end of

63
00:03:57,800 --> 00:04:01,600
Speaker 1: the third quarter this year. Before or then, UM, we

64
00:04:01,680 --> 00:04:05,920
Speaker 1: do not expect UH major actions UM in terms of

65
00:04:05,960 --> 00:04:10,600
Speaker 1: stimulus or otherwise UM, because that meeting would take a

66
00:04:10,640 --> 00:04:14,400
Speaker 1: priority for the government UM and UM in terms of

67
00:04:14,680 --> 00:04:17,240
Speaker 1: measures whether or not people will still will be able

68
00:04:17,440 --> 00:04:21,480
Speaker 1: or capable to launch other stimulus. I think they are

69
00:04:21,560 --> 00:04:25,400
Speaker 1: capable of launching further stimulus, but in terms of priority,

70
00:04:25,720 --> 00:04:28,599
Speaker 1: we do need to see that shooting UM come through first.

71
00:04:29,000 --> 00:04:31,080
Speaker 1: Does that mean that you think there will be stimulus,

72
00:04:31,080 --> 00:04:34,719
Speaker 1: but it'll have to be after the party congress. I

73
00:04:34,760 --> 00:04:38,479
Speaker 1: think major actions would have to be taken after the meeting.

74
00:04:38,720 --> 00:04:42,040
Speaker 1: But before the meeting, there can be minor actions that

75
00:04:42,160 --> 00:04:45,520
Speaker 1: there can be taken by the government. For example, we've

76
00:04:45,560 --> 00:04:49,520
Speaker 1: seen the removal of the purchase tax for the auders,

77
00:04:49,600 --> 00:04:53,279
Speaker 1: so UM actions like that can actually happen before the meeting,

78
00:04:53,440 --> 00:04:56,880
Speaker 1: but major actions would have happened after the meeting. Okay,

79
00:04:57,000 --> 00:05:00,720
Speaker 1: so major actions what are we talking about here? UM?

80
00:05:01,000 --> 00:05:04,679
Speaker 1: Major actions including UM the lowering of the rates probably

81
00:05:05,320 --> 00:05:07,440
Speaker 1: our our rates are interest rates and things like that.

82
00:05:08,839 --> 00:05:12,560
Speaker 1: And what is the key in your view, um Selena

83
00:05:12,640 --> 00:05:16,839
Speaker 1: on getting at the major issues in the property sector.

84
00:05:16,880 --> 00:05:20,960
Speaker 1: I mean, what is it that's really uh causing the

85
00:05:21,040 --> 00:05:27,920
Speaker 1: property market to sputter? I think, UM, fundamentally, the real

86
00:05:28,160 --> 00:05:34,240
Speaker 1: estate market in China, it's overdue for consolidation. It's been

87
00:05:34,360 --> 00:05:38,480
Speaker 1: way too fragmented UM in the section. And therefore, UM,

88
00:05:38,920 --> 00:05:42,360
Speaker 1: some kind of consolidations already overdue, and therefore, UM the

89
00:05:42,400 --> 00:05:45,560
Speaker 1: government needs to manage the situation. And we we do

90
00:05:45,760 --> 00:05:50,320
Speaker 1: expect consolidation in that sector. And therefore the stronger developers

91
00:05:50,320 --> 00:05:54,320
Speaker 1: would become stronger, or the leading developers will become stronger

92
00:05:54,520 --> 00:05:57,280
Speaker 1: over the long run, and the smaller ones, the weaker

93
00:05:57,279 --> 00:06:00,760
Speaker 1: ones would be would be eliminated. So as as a whole,

94
00:06:00,800 --> 00:06:03,400
Speaker 1: over the medium and long run, the whole sector should

95
00:06:03,480 --> 00:06:07,599
Speaker 1: become more positive rather than negative. More generally, when you

96
00:06:08,040 --> 00:06:10,920
Speaker 1: run your eye across the equities and China, are there

97
00:06:11,000 --> 00:06:15,400
Speaker 1: any quality names that are looking over sold to you? Uh?

98
00:06:15,520 --> 00:06:19,160
Speaker 1: There are sectors um that's looking more interesting at this point.

99
00:06:19,200 --> 00:06:23,040
Speaker 1: For example, UM, consumer discretionary Like what with that? CPI

100
00:06:23,160 --> 00:06:25,159
Speaker 1: is likely going to try to a little bit that

101
00:06:25,240 --> 00:06:29,080
Speaker 1: SAT consumers are more ready to take up price prices

102
00:06:29,400 --> 00:06:31,320
Speaker 1: in or for the CPR to go up and therefore

103
00:06:31,360 --> 00:06:35,760
Speaker 1: consummer discretion you may look interesting, and consumer staples sector

104
00:06:35,960 --> 00:06:40,400
Speaker 1: would also look interesting when the consumer consumption power can

105
00:06:40,440 --> 00:06:47,400
Speaker 1: become slightly stronger than previously. Mm hmm interesting. Selena, Thanks

106
00:06:47,440 --> 00:06:49,040
Speaker 1: very much for joining us and trying trying to get

107
00:06:49,080 --> 00:06:52,159
Speaker 1: my head around that as property prices fall and as

108
00:06:52,200 --> 00:06:55,320
Speaker 1: that sector consolidates. As you say, whether or not the

109
00:06:55,400 --> 00:06:58,719
Speaker 1: reverse wealth effect is affecting people in their abilities to buy,

110
00:06:58,720 --> 00:07:00,920
Speaker 1: but we'll save that for another day. Selina, see a

111
00:07:00,920 --> 00:07:04,160
Speaker 1: Greater China Equity Research had a credit Sweets Wealth management