1
00:00:00,160 --> 00:00:02,280
Speaker 1: Let's get to our market's guests now. Stay found Monia,

2
00:00:02,400 --> 00:00:04,920
Speaker 1: chief investment officer at Lombard earlier joining us on the

3
00:00:04,920 --> 00:00:07,920
Speaker 1: line from Singapore. Great to have you with us against

4
00:00:07,920 --> 00:00:10,600
Speaker 1: step Farm. We spoke on television a few months ago.

5
00:00:11,000 --> 00:00:15,560
Speaker 1: We saw more jumbo hikes signaled from j Pal overnight

6
00:00:15,560 --> 00:00:18,280
Speaker 1: our time, and that came just hours after the ECB

7
00:00:18,480 --> 00:00:20,760
Speaker 1: did that. What are we kind of hearing in terms

8
00:00:20,760 --> 00:00:23,600
Speaker 1: of the very hawki ish messages from central bankers as

9
00:00:23,600 --> 00:00:27,720
Speaker 1: they try to rein in inflation. Well, you know, the

10
00:00:28,200 --> 00:00:30,720
Speaker 1: message was at the surprise, it was a confirmation of

11
00:00:31,040 --> 00:00:35,320
Speaker 1: jackson old speech and clearly, you know, both the Federal

12
00:00:35,360 --> 00:00:39,360
Speaker 1: Reserve and the European Central Bank are fighting to regain

13
00:00:39,440 --> 00:00:43,400
Speaker 1: the credibility they have lost, you know, on inflation over

14
00:00:43,440 --> 00:00:46,559
Speaker 1: the last uh, you know, a few months, and therefore,

15
00:00:47,080 --> 00:00:48,839
Speaker 1: you know, you can expect that they will continue on

16
00:00:48,840 --> 00:00:54,279
Speaker 1: this policity of a king rates rapidly towards the end

17
00:00:54,280 --> 00:00:56,280
Speaker 1: of the year, and then it would keep the rates

18
00:00:56,680 --> 00:01:01,600
Speaker 1: at the level the tresure appropriate for more of twenty three.

19
00:01:02,040 --> 00:01:04,280
Speaker 1: How concerned are you that we are going to see

20
00:01:04,319 --> 00:01:06,960
Speaker 1: some kind of big downturn, particularly when you look at

21
00:01:07,000 --> 00:01:09,240
Speaker 1: the energy crisis in Europe couple with all the other

22
00:01:09,280 --> 00:01:15,600
Speaker 1: headwindes we're facing in the stuation is more difficult in

23
00:01:15,640 --> 00:01:19,600
Speaker 1: Europe as you as you mentioned Juliet. But our main

24
00:01:19,640 --> 00:01:24,000
Speaker 1: scenari we give a seventy probability to a mid recession

25
00:01:24,080 --> 00:01:28,039
Speaker 1: in the US in twenty three and thirty percent probability

26
00:01:28,120 --> 00:01:32,200
Speaker 1: of a depresssion. It all depends on how the rate

27
00:01:32,240 --> 00:01:35,280
Speaker 1: acts from the said are going to be effective on

28
00:01:35,360 --> 00:01:40,200
Speaker 1: the US unemployment rate. If you know, they managed to

29
00:01:40,640 --> 00:01:45,240
Speaker 1: push you know, inflation down to more reasonal level with

30
00:01:45,240 --> 00:01:48,000
Speaker 1: with an unemployment rate of around you know, four and

31
00:01:48,000 --> 00:01:50,720
Speaker 1: a half a percent, we will have a mid recession.

32
00:01:50,800 --> 00:01:53,520
Speaker 1: If they need to push the unemployment rate as much as,

33
00:01:53,600 --> 00:01:56,640
Speaker 1: let's a six percent, then we'll have a very depresssion.

34
00:01:57,680 --> 00:02:00,559
Speaker 1: Let's talk about the impact to Asia and particularly from

35
00:02:00,720 --> 00:02:02,920
Speaker 1: the strong dollar. I mean a lot of concerns about

36
00:02:02,920 --> 00:02:06,560
Speaker 1: outflows here too. Where are you seeing kind of value

37
00:02:06,600 --> 00:02:09,079
Speaker 1: when we did see Asian equities hit that two year

38
00:02:09,160 --> 00:02:13,880
Speaker 1: low or more than two yellow earlier in the week, Well,

39
00:02:14,639 --> 00:02:18,080
Speaker 1: it is clear that already a lot of concerns are

40
00:02:18,160 --> 00:02:22,200
Speaker 1: embedded in the current equity market prices in Asia. But

41
00:02:22,680 --> 00:02:27,400
Speaker 1: in the long run, this kind of witness and depressed valuation,

42
00:02:27,960 --> 00:02:32,080
Speaker 1: we think will create interesting opportunities for investors because you know,

43
00:02:32,360 --> 00:02:35,840
Speaker 1: different Asian countries long term growth journey is not finished.

44
00:02:35,880 --> 00:02:40,760
Speaker 1: You will not stop despite the current challenges. And what

45
00:02:41,000 --> 00:02:43,720
Speaker 1: is not worthy also is that there has been more

46
00:02:43,800 --> 00:02:47,200
Speaker 1: challenges in terms of valuation in North Asia than in

47
00:02:47,280 --> 00:02:52,360
Speaker 1: South Asia. The MCI Asia ex Japan was done twenty

48
00:02:52,400 --> 00:02:56,360
Speaker 1: percent this year, and there are some countries have had

49
00:02:56,440 --> 00:02:59,680
Speaker 1: that type of negative performance, such as China, Korea or

50
00:02:59,720 --> 00:03:04,280
Speaker 1: tai One. Yeah, they're performing better or showing positive performance.

51
00:03:04,760 --> 00:03:07,120
Speaker 1: So just picking up where you have seen some value

52
00:03:07,120 --> 00:03:10,760
Speaker 1: in the likes of Indian and Asian indicries, how much

53
00:03:10,800 --> 00:03:14,679
Speaker 1: further do we see sort of positive positivity in these indexes?

54
00:03:14,760 --> 00:03:16,680
Speaker 1: And it is that really driven as well by the

55
00:03:16,720 --> 00:03:21,760
Speaker 1: reopening story which is ahead of North Asia. I think

56
00:03:21,760 --> 00:03:24,520
Speaker 1: there would be probably more of a catch up of

57
00:03:24,600 --> 00:03:28,560
Speaker 1: North Asia rather than stuff Asia going uh you know

58
00:03:29,120 --> 00:03:33,160
Speaker 1: going on. This will of course depend heavily on china

59
00:03:33,240 --> 00:03:37,920
Speaker 1: reopening prospect and also on global economic condition. If you

60
00:03:38,080 --> 00:03:43,520
Speaker 1: take the NA Asia ex Japan, currently the forward person

61
00:03:43,600 --> 00:03:47,800
Speaker 1: in ratio is around twelve point uh twelve times, which

62
00:03:48,000 --> 00:03:51,080
Speaker 1: is a third lower than you know the US, so

63
00:03:51,800 --> 00:03:54,960
Speaker 1: there there there is a valuation beffer in the region

64
00:03:55,000 --> 00:03:58,640
Speaker 1: in comparison to other markets in the world. I mentioned

65
00:03:58,640 --> 00:04:00,280
Speaker 1: the strength of the dollar and we know that that

66
00:04:00,440 --> 00:04:02,800
Speaker 1: is always adding to those worries that we mentioned about

67
00:04:02,800 --> 00:04:05,360
Speaker 1: capital outflows. Where do you see I guess for the

68
00:04:05,440 --> 00:04:08,440
Speaker 1: weakness in some of these e M currencies and are

69
00:04:08,480 --> 00:04:11,520
Speaker 1: we going to face a similar scenario to what we

70
00:04:11,560 --> 00:04:18,839
Speaker 1: saw in Well, you know, first, what we've noticed until

71
00:04:18,880 --> 00:04:23,080
Speaker 1: now is that effects reserve have fallen between six to

72
00:04:23,120 --> 00:04:26,520
Speaker 1: twelve percent depending on the country here to date. This

73
00:04:26,640 --> 00:04:30,279
Speaker 1: is a combination of capital outflows and also some occasional

74
00:04:30,600 --> 00:04:35,520
Speaker 1: intervention by the central banks that compared to what happened

75
00:04:35,720 --> 00:04:38,680
Speaker 1: you know in purious crisis, is not that much. We

76
00:04:38,720 --> 00:04:42,119
Speaker 1: have a relatively cautious our look for emerging market Asian

77
00:04:42,160 --> 00:04:46,000
Speaker 1: currencies at this time, but we think that the original

78
00:04:46,000 --> 00:04:49,240
Speaker 1: currency could do better than other emerging markets such as

79
00:04:49,360 --> 00:04:54,680
Speaker 1: Eastern Europe. We see that currency like the Managing ring

80
00:04:54,760 --> 00:04:58,239
Speaker 1: It or the Saple dollar holding their grounds better versus

81
00:04:58,240 --> 00:05:02,920
Speaker 1: the US are are because have the tarantagerous positions as

82
00:05:02,960 --> 00:05:07,480
Speaker 1: a statation edge. On the other end, we think also

83
00:05:08,160 --> 00:05:12,600
Speaker 1: that the Taiwan dollar and the Chinese m Indeed, UH

84
00:05:12,640 --> 00:05:17,960
Speaker 1: could further depreciate that this will be limited given intervention

85
00:05:18,000 --> 00:05:22,520
Speaker 1: that will see from you know, their authorities, but also

86
00:05:23,000 --> 00:05:27,080
Speaker 1: they have a very positive underlying external balances. Yeah, be

87
00:05:27,120 --> 00:05:29,520
Speaker 1: interesting to see if we get a thirteen stronger bias

88
00:05:29,560 --> 00:05:31,480
Speaker 1: in terms of that fixed today too, let's talk more

89
00:05:31,480 --> 00:05:34,160
Speaker 1: broadly about the China economy story. We're going to get

90
00:05:34,200 --> 00:05:37,640
Speaker 1: that big data dump next week. How much I guess

91
00:05:37,640 --> 00:05:40,760
Speaker 1: for the weakness you're expecting in the economy and does

92
00:05:41,160 --> 00:05:43,560
Speaker 1: things or do things change after the Party Congress? Do

93
00:05:43,640 --> 00:05:45,800
Speaker 1: we start to see more support in a turnaround here?

94
00:05:45,800 --> 00:05:50,840
Speaker 1: And I guess perhaps a pivot away from COVID zero. Well,

95
00:05:51,560 --> 00:05:55,440
Speaker 1: you know, the first one issue that they don't have

96
00:05:55,800 --> 00:06:00,120
Speaker 1: as other countries is inflation, right, interestion is retain you

97
00:06:00,160 --> 00:06:03,760
Speaker 1: know in China, and that's an advantage for them. And

98
00:06:04,080 --> 00:06:06,919
Speaker 1: if you look at the monetary and fiscal measures they

99
00:06:06,920 --> 00:06:10,479
Speaker 1: have taken recently, they are quite significant. If you compare

100
00:06:10,520 --> 00:06:13,839
Speaker 1: them to what, for example, on the fiscal side, what

101
00:06:13,960 --> 00:06:16,880
Speaker 1: they did back at the time of COVID in early

102
00:06:16,920 --> 00:06:20,520
Speaker 1: twenty we are having a measures of a similar amount.

103
00:06:20,760 --> 00:06:25,159
Speaker 1: So yes, indeed, you know we expect rebound in the

104
00:06:25,240 --> 00:06:27,640
Speaker 1: Chinese economy in the second half of the year. But

105
00:06:27,760 --> 00:06:30,160
Speaker 1: this is of course all dependent on the evolution of

106
00:06:30,160 --> 00:06:33,960
Speaker 1: the COVID venting crisis. So I think it has already happened.

107
00:06:34,000 --> 00:06:36,240
Speaker 1: You know that the fiscal measure that had been announcer

108
00:06:36,279 --> 00:06:38,400
Speaker 1: that of being put in place, had been put in

109
00:06:38,400 --> 00:06:42,280
Speaker 1: place ahead of the Congress of the Communist Party, So

110
00:06:42,320 --> 00:06:46,040
Speaker 1: that's uh, you know, already moving As far as the

111
00:06:46,040 --> 00:06:48,520
Speaker 1: COVID policy is concerned. For the time being, we are

112
00:06:48,520 --> 00:06:51,760
Speaker 1: not saying me change. There has been slight I would

113
00:06:51,800 --> 00:06:55,960
Speaker 1: say losening of the measures in case of lockdown, but

114
00:06:56,160 --> 00:06:59,440
Speaker 1: obviously this is a very touchy issue for the for

115
00:06:59,480 --> 00:07:03,400
Speaker 1: the Chinese government. Indeed, how investable is China from a

116
00:07:03,440 --> 00:07:10,480
Speaker 1: lombard earlier of you? China is investable from a Lombardier

117
00:07:10,560 --> 00:07:13,880
Speaker 1: point of view, especially because it's a very good diversifier

118
00:07:14,040 --> 00:07:17,600
Speaker 1: in a global portfolio. China represents you know, sixteen or

119
00:07:19,040 --> 00:07:24,080
Speaker 1: of the world economy from a p PP adjusted point

120
00:07:24,120 --> 00:07:27,360
Speaker 1: of view, and therefore, you know, an investor cannot a

121
00:07:27,360 --> 00:07:31,120
Speaker 1: global investor cannot ignore China. It's a very important economy,

122
00:07:31,280 --> 00:07:34,280
Speaker 1: very important financial market, and we do invest in China.

123
00:07:35,640 --> 00:07:37,120
Speaker 1: And finally, I just wanted to ask you about what

124
00:07:37,160 --> 00:07:40,200
Speaker 1: we saw from the RBA Governor Low yesterday which saw

125
00:07:40,280 --> 00:07:43,680
Speaker 1: quite a big turnaround in the global bond market. But

126
00:07:43,840 --> 00:07:48,480
Speaker 1: that signal there to potentially end those large hikes. Just

127
00:07:48,520 --> 00:07:50,320
Speaker 1: tell us how you read that, and I guess what

128
00:07:50,360 --> 00:07:52,640
Speaker 1: it could mean for other central bank thinking to moving

129
00:07:52,640 --> 00:07:59,840
Speaker 1: forward into three Yes. Since we see Australia growth, disider

130
00:08:00,080 --> 00:08:02,320
Speaker 1: think to one on our percent paces in the next

131
00:08:02,320 --> 00:08:07,240
Speaker 1: few quarters, especially with some modest softening in the labor market,

132
00:08:07,680 --> 00:08:10,600
Speaker 1: we believe it is appropriate for the AIRBA at least

133
00:08:10,800 --> 00:08:15,760
Speaker 1: debate smaller step hags depending on the inflation at look. However,

134
00:08:15,880 --> 00:08:18,040
Speaker 1: we think also the guidance should be managed carefully because

135
00:08:18,040 --> 00:08:21,080
Speaker 1: the inflation is still quite high and the long term

136
00:08:21,320 --> 00:08:24,320
Speaker 1: we think that the z rate will remain volatile and

137
00:08:24,400 --> 00:08:27,880
Speaker 1: more created to the U. S. Treasury US before they

138
00:08:27,880 --> 00:08:33,680
Speaker 1: come down clear clear in three oh. It's a pleasure, Stephan,

139
00:08:33,760 --> 00:08:36,160
Speaker 1: Thank you so much. Stepan Money as chief investment Officer.

140
00:08:36,320 --> 00:08:39,280
Speaker 1: Learn about audio joining us from Singapore here on Bloomberg

141
00:08:39,320 --> 00:08:40,120
Speaker 1: Daybreak Asia