Speaker 1: Let's get to our guests, right. Heil China is chief
Speaker 1: investment officer at mary as Set Global Investments, joining us
Speaker 1: in our Hong Kong studio. We want to talk about
Speaker 1: your views on investing in Asia and particularly how investable
Speaker 1: China is. But just getting to the broader picture of
Speaker 1: fair officials stressing their commitment to defeating inflation here, how
Speaker 1: much is kind of pipe hike priced in excuse me,
Speaker 1: into markets that we could see another aggressive hike. So
Speaker 1: I think what Fred is on the stub around is
Speaker 1: it's kind of a front end a lot of hikes.
Speaker 1: And that's come because for the last couple of years
Speaker 1: Fred was more worried about deflation than inflation. And look,
Speaker 1: a fair bit of hikes have been frontended. Markets are
Speaker 1: priced in. What markets are now watching is or what
Speaker 1: impact does it have on economic data? So clearly we've
Speaker 1: seen Europe slow down, China slowed down to it's it's
Speaker 1: the U S consumer US business pens which are holding
Speaker 1: on our view is by early two thwenty three valty
Speaker 1: some signs of slow don't over there also, indeed, and
Speaker 1: when each point to the data, the jobs market is
Speaker 1: certainly key as well. We're looking ahead to that a
Speaker 1: d P report and then the key jobs number as well.
Speaker 1: When we start to see a slowdown in the consumer,
Speaker 1: how much does that kind of just add to these
Speaker 1: concerns about a recession. So I think clearly once there
Speaker 1: is a bit of a slowdown, But argue is this
Speaker 1: recission is going to be shallow because unlike the previous cycle,
Speaker 1: which is the two eight cycle, they're not many economic exercis.
Speaker 1: In fact, the problem in the world was that last
Speaker 1: ten years China or invested and the rest of the
Speaker 1: world did not invest. So if at all this this
Speaker 1: slowdown recission happens, I think it's going to be a
Speaker 1: couple of quarters of a shallow cycle. The other key
Speaker 1: issue for investors is what's happening with gear politics, And
Speaker 1: we saw Taiwanese soldiers firing shots toward off these civilian
Speaker 1: drones that were flying close to the islands controlled by
Speaker 1: Taipei near China. When you look at the gear political risk,
Speaker 1: is that just another reason to kind of stay away
Speaker 1: from markets at the moment or are you trying to
Speaker 1: head you? So I think clearly this is this is
Speaker 1: a challenged situation managing money in these times. The tailers
Speaker 1: have become a lot more fat fatter, as they say,
Speaker 1: And I think if one sees some of these risks
Speaker 1: kind of a materializing, one may have to change positions
Speaker 1: very very quickly. But at this point of time, I
Speaker 1: think both sides are mature and I don't see a
Speaker 1: major escalation on this part. All right, Let's get to
Speaker 1: the China story though, because as we're talking about a
Speaker 1: potential pile up of problems, could see it hit to
Speaker 1: the p m s for China. In your view, where
Speaker 1: do you see the most value in that market? Okay, So,
Speaker 1: I think Lady, one thing which we've got to see
Speaker 1: which China, is this relaxation of done with zero COVID
Speaker 1: policy they're following. The hope is that after after the
Speaker 1: Congress meeting in October UM things kind of ease out.
Speaker 1: And we've seen with the new strains of the virus,
Speaker 1: these are more contagious but less fatal um so I
Speaker 1: think the authorities know that. So so they're also opening
Speaker 1: up fairly quickly. So as they relax on this zero COVID,
Speaker 1: as they do a bit of an easy we should
Speaker 1: see some bit of an economic recovery come through. Um,
Speaker 1: the Internet platforms are very very attractive. See longer term
Speaker 1: we've got issues on growth rates China is going to achieve.
Speaker 1: But near term, I think with a strong pent up
Speaker 1: demand coming through once the reopening happens, um these names
Speaker 1: can have a decent upside Alright, So take you like,
Speaker 1: what about the property space. We've stayed away from property space.
Speaker 1: I think I think clearly there are some trading opportunities
Speaker 1: here and there, but the overall builds are going to
Speaker 1: settle at a much lower number UM. So that's that's
Speaker 1: a very tactical space. And I think clearly, with the
Speaker 1: aging population and all those things, that would not be
Speaker 1: a structural story. If you've got to play the value
Speaker 1: part in China, you'd rather do the internet platforms. So
Speaker 1: we're talking about some of your calls, and you said,
Speaker 1: despite cheap valuations, underweight China, but you are overweight India.
Speaker 1: Why it's a story we've liked for the last couple
Speaker 1: of years, and I think the story is clearly coming
Speaker 1: of it. What we've seen being done by the government
Speaker 1: is bearing food. Now, whatever governments done on goods and
Speaker 1: service taxes resulting in higher tax collections. The PLI scheme
Speaker 1: to attract investments is working out and it's a fresh
Speaker 1: economic cycle. So so despite all the noise we've seen
Speaker 1: in the world, the growth continues to surprise positively. Um
Speaker 1: though the markets kind of a done well in recent
Speaker 1: times if you see from the COVID lows. In fact,
Speaker 1: India's outperform other e M significantly. But this is a
Speaker 1: market to buy on depths. Any any correction which comes
Speaker 1: because of energy shocks, we'd be looking to increase. Are
Speaker 1: in the exposure. A lot of their recovery and action
Speaker 1: is being driven by tourism. But when we start to
Speaker 1: look at the spike in energy bills, which you point
Speaker 1: out could derail the fledging recovery, how much a price
Speaker 1: pressures a concern here. So clearly Indian and Asian are
Speaker 1: two kind of regions which will get negatively impacted should
Speaker 1: there be in a spike in energy builts significantly from
Speaker 1: hair but to their advantage. What what these two regions
Speaker 1: are seeing as benefits of a bit of a manufacturing
Speaker 1: move away from China. Um, it's a fresh economic cycle.
Speaker 1: Volutions of corrictits. For some of the growth names or
Speaker 1: internet names which are listed in Asia, these names are
Speaker 1: down seventy percent from heist we saw in the tech
Speaker 1: bubble two thousand's most good companies kind of a bottom
Speaker 1: that down from high. So so for any investors who's
Speaker 1: got a three four year timeframe, UM, they're good knee
Speaker 1: stories in ours and and one market particularly we like
Speaker 1: in our Zender's Vietnam. I think it's an underrated market
Speaker 1: because it's not part of the ms UM, it's not
Speaker 1: that discovered. But look at what you get is great companies,
Speaker 1: good rose, good business models, at early stage of their
Speaker 1: growth and at a fraction of valuations of India. So
Speaker 1: so I think that's a market one as to keep
Speaker 1: an eye out for. Yeah, that economy is powering along us.
Speaker 1: There are a few weeks ago and first time in
Speaker 1: a few years it is completely changing country Vietnam. You're
Speaker 1: also looking at some of the e V battery names
Speaker 1: as well. Tell us, I guess the thought here of
Speaker 1: not only I guess investing in the future, but just
Speaker 1: the fact that we are seeing such a strong demand
Speaker 1: for some of these companies. So I think clearly that's
Speaker 1: where Korea becomes of interest to us. So so it's
Speaker 1: a non consensus kind of UM overweight reasonable exposure. Large
Speaker 1: exposure for US we like in Korea is some of
Speaker 1: the Korean automakers who are also the top three companies
Speaker 1: in EVS largely Evan diamotors and in a group et
Speaker 1: cetera in Europe and US, and then um, there is
Speaker 1: the current EVY battery makers. So what we're going to
Speaker 1: see is a lot of the Korean EVY battery makers
Speaker 1: make in roads into US at the cost of the
Speaker 1: Chinese payers, and I think that's the opportunity. So if
Speaker 1: you look at the scale up for the leading ev
Speaker 1: batterymakers in Korea, it is five to six six their
Speaker 1: current revenues in the coming decade, So I think that's
Speaker 1: a significant growth opportunity. How much is a concern about
Speaker 1: awakening currencies in Asia sort of giving the thought that
Speaker 1: you could see what happened in ninety seven, I mean,
Speaker 1: we're saying these calls that you could see the yen
Speaker 1: towards one forty, and then we've got the PBOC really
Speaker 1: trying to stem the decline in its currency. So I
Speaker 1: think one has to keep that at the back of
Speaker 1: the point. Um that that kind of a ties into
Speaker 1: what we were discussing on a separate note earlier the
Speaker 1: geopolitical conflict and the fatter tail risks in today's world.
Speaker 1: So I think that's where it comes through in currencies.
Speaker 1: With all being so strong, with the US rates being
Speaker 1: at three three to three and a half percent, and
Speaker 1: UM e c B looking to do a eek of
Speaker 1: control bj BJ looking to do eek of control U
Speaker 1: currencies are going to be fairly volatile, and that's something
Speaker 1: one has to keep in mind. The hope here is
Speaker 1: that the policymakers have learned from the mistakes of the past,
Speaker 1: so should there be event like freezing of credit markets,
Speaker 1: they're going to step in very quickly. Not a great
Speaker 1: year so far for Asian stocks, only two months that
Speaker 1: we're in the black and basically the gains that we
Speaker 1: saw in July being wiped out by the losses in August.
Speaker 1: Where do we go for the last four months of
Speaker 1: the year. I think four months are going to be
Speaker 1: fairly ranged bound, but this gives you an opportunity to
Speaker 1: build a portfolio for next three years. UM. The view
Speaker 1: is that we'll see some signs of slowdown in the
Speaker 1: US in the next six to eight months, and that's
Speaker 1: where monetary policy turns neutral and and look, the hope
Speaker 1: is that fits speak does most of the work rather
Speaker 1: than the actual actions, et cetera. And what what we
Speaker 1: have is valuations as a friend. Valuations as a friend.
Speaker 1: It's a um underground kind of a space. So anybody
Speaker 1: who's got a three year time frame, I think next
Speaker 1: six months would give great opportunities to accumulate in the market.
Speaker 1: As they say, not timing. Thank you so much for
Speaker 1: health chat to Chief investment Officer Mary Asset Global Investments,
Speaker 1: joining us in our Hong Kong studio here on Bloomberg
Speaker 1: Dead Raccasion