Speaker 1: Last week, China had its annual NPC meeting in Beijing,
Speaker 1: laying out a growth target for the year of about
Speaker 1: five percent and boosting planned spending by the most in
Speaker 1: three decades. Shortly afterwards, President Trump spoke to Congress, defending
Speaker 1: tariffs and reminding investors that China's goals won't be so
Speaker 1: easy to reach.
Speaker 2: And don't forget announcements by Europe and also China to
Speaker 2: increase their defense spending. These rapid fire developments are almost
Speaker 2: becoming the norm, and it's becoming harder for many investors
Speaker 2: to make big decisions. But one set of investors seem
Speaker 2: to be thriving in this chaos. And then macro hedge funds.
Speaker 1: You're listening to Asia Centric and today we want to
Speaker 1: unpack how investors should be thinking about this new era.
Speaker 1: We're speaking with kaal Bin, CEO of Kaifeng Investment Management,
Speaker 1: which oversees about one point three billion dollars in assets.
Speaker 1: The macro hedge fund made a seventy six percent return
Speaker 1: last year, not too shabby. Ben, welcome to the show.
Speaker 3: Really glad to be here. Thanks about having me.
Speaker 1: Thanks for being here. Now I want to start with
Speaker 1: the NPC. It just happened, and I know it's on
Speaker 1: your mind. It's definitely on our minds. Interesting to get
Speaker 1: your thoughts as a macro investor. First of all, big question,
Speaker 1: do you think officials will be able to reach five percent? Why?
Speaker 4: Why not?
Speaker 3: I think they will. The first thing is that the
Speaker 3: four percent budget as you mentioned, plus one point eight
Speaker 3: trillion dollars special treasury bond plus a four point four
Speaker 3: trillion special local government bound all take out amount to
Speaker 3: twelve trillion R and B. That's about eighty percent of GP.
Speaker 3: Is quite significant. And the other thing is you need
Speaker 3: to spend them wisely, and spending area seems to be
Speaker 3: focused on to upgrades and two keys they called liang
Speaker 3: shin in Chinese. The two upgrades include the first one
Speaker 3: is a industrial equipment upgrade and the second one is
Speaker 3: consumer products upgrade. The former is linked to the use
Speaker 3: of more efficient equipment which is also greener, and the
Speaker 3: letter is similar to cash for clunkers. Basically, they want
Speaker 3: consumers to consume and that's an area China is a
Speaker 3: lack of inter economic growth. But more important, I think
Speaker 3: is the exclusion of the other two keys. The first
Speaker 3: key is called execution of key National strategies. A second
Speaker 3: is the capacity building in key areas of national security. Essentially,
Speaker 3: they are investment high technologies in the competition with the US.
Speaker 3: And the important thing of this is that we have
Speaker 3: actually seen some estimates puts the multiplier at the two
Speaker 3: point eight to three point five. This is in contrast
Speaker 3: to the old ways of infrastructure spending where the multiplier
Speaker 3: has dropped to point eight from one twenty.
Speaker 1: So more bang, they're getting more bang for their book.
Speaker 3: Yeah, I believe that. So if we say it's got
Speaker 3: two point eight two three point five multiplier, effect eight
Speaker 3: hundred billion of this spending translate to two point four trilling.
Speaker 3: That's still significant. Beijing has been very concerned in terms
Speaker 3: of the government spending for the last few years, and
Speaker 3: as far as I remember, even back in twenty sixteen,
Speaker 3: while I was in Beijing talking two officials, they were
Speaker 3: reluctant to open the tap. They basically argue that I
Speaker 3: don't know where to spend because they don't get a multiplier.
Speaker 3: But recently Deepsek changed the situation. With Deepsey coming out,
Speaker 3: Beijing seemed to be more confident in terms spending this area.
Speaker 3: And so that's why you guys a high multiplier.
Speaker 1: But can this spending, even with the higher multipliers, you say,
Speaker 1: counteract the impact of tariffs and this sort of growing
Speaker 1: protectionism we're seeing globally.
Speaker 3: There's I mean, the tariffs is definitely highway for China,
Speaker 3: but I think that people tend to overestimate the tariff's
Speaker 3: impact on China's growth. We have seen it in twenty eighteen.
Speaker 3: It tend to be that if I want to put
Speaker 3: tariffs on the other country, I would do the one
Speaker 3: which hurts the other country the most and it's best
Speaker 3: for me, right, And that's what Trump did in the
Speaker 3: first term. So whatever new terriffsy put in there is
Speaker 3: going to be less impactful. And the tariff has actually
Speaker 3: lowered China's export to the US. The one number I
Speaker 3: think a lot of people don't talk about is China's
Speaker 3: total exports to the US. It's a two pout six,
Speaker 3: only eight percent of China's GDP. I mean not saying
Speaker 3: that's not significant, it's a significant. But and let's say
Speaker 3: the terriff is so high China does not directly export
Speaker 3: to you as I need more nothing. Let's say that's
Speaker 3: a s creme case. That's two one eight percent of
Speaker 3: GDP off China's So China can really increase the pascal
Speaker 3: spending if that it's the case, and the China does
Speaker 3: have the room to do the pascal spending unlike many
Speaker 3: pear and China is a really leverage.
Speaker 2: Under that, So you're basically saying that China is less
Speaker 2: exposed to exports and the domestic economy is much more important.
Speaker 2: And I wanted to talk about the consumer sector, and
Speaker 2: you mentioned cash for clunkers, But has authorities done enough
Speaker 2: to boost consumer spending?
Speaker 3: Uh, the government they do not want to do the
Speaker 3: US style, you know, flowers of the economy with all
Speaker 3: the liquidity, you with the massive leverage built up, and
Speaker 3: they were quite slow right after the pandemic. They could
Speaker 3: have done more. But since September last year they did
Speaker 3: do a lot more than before. Incrementally they have been
Speaker 3: giving copounds cash to consumers. But during the pandemic some
Speaker 3: local government tried to provide the cash and the copounds.
Speaker 3: But I still believe that given at the national level,
Speaker 3: and the multiplier should definitely be much bigger than the
Speaker 3: infrastrust spending. If you ask me that whether that's enough,
Speaker 3: I don't really know the answer. I think that's so
Speaker 3: far the evidence looks to be good. I think the
Speaker 3: important thing is whether China government or Beijing had the will.
Speaker 3: If there's a will, there's a way. But of course
Speaker 3: you need to have the room, and China definitely hads
Speaker 3: the room in terms of physical leverage. And also they
Speaker 3: have not done q They can do the que as well.
Speaker 3: If they won't, I think that's what's most like to happen,
Speaker 3: rather than that's the one time they are always say
Speaker 3: they will. Given Actually, the head of a NDRC mentioned
Speaker 3: there's a special program for consumption in the press conference.
Speaker 3: We don't know whether that is, and the rumor says,
Speaker 3: okay is going to be another few hundred billion R
Speaker 3: and B if that comes out. I think that's definitely enough.
Speaker 1: Yeah, seems like they're hyper focused on the consumer this time.
Speaker 1: I mean even in the speech, right, that was one
Speaker 1: of the first things out of the premier's mouth on
Speaker 1: the consumer. As a hedge fund, how do you translate
Speaker 1: this thinking and your view of what's going to happen
Speaker 1: in China and the Chinese economy this year into action?
Speaker 1: What are you investing in?
Speaker 3: So we are in a transition, you know, we are
Speaker 3: not really like trying to say, Okay, you are really
Speaker 3: bullish on China's economics, say no, no, no, we are not
Speaker 3: really bullish in the sense that we don't see China
Speaker 3: growing at six percent, seven or whatever is it used
Speaker 3: to be. Actually, we are structly bullish on certain parts
Speaker 3: of the economy and we're being cautious in other parts
Speaker 3: of the economy. I mentioned the multiplier for instruct spending
Speaker 3: is very long now, and the government knows that. That's
Speaker 3: why the government not eager to save property now, the
Speaker 3: eager to spend a lot on infrastructure, and that translates
Speaker 3: to low demand for commodities. So we are generally short
Speaker 3: on the community side, but we're generally more bullish equities
Speaker 3: because the government transition from infstruct spending to consumers, and
Speaker 3: the consumer demand can drive the demand for products, and
Speaker 3: the products may translate into corporate profits because a lot
Speaker 3: of the consumers are willing to spend. That translates into
Speaker 3: potential for stock pus rally.
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Speaker 2: share in You guys, you made seventy six percent return
Speaker 2: last year. Can you tell us what home runs did
Speaker 2: you make last year? And then what do you like?
Speaker 4: Now?
Speaker 3: Okay, I need to be totally clear here. You know,
Speaker 3: we have two accounts. The highly leverage account is seventy
Speaker 3: plus and the other one the lower leverage that's close
Speaker 3: to forty percent, and it's still good. But I want
Speaker 3: to be still good as well. We basically have two
Speaker 3: books in both the last same a lot one books
Speaker 3: that were called a China replication. Remember we define our
Speaker 3: fund ads are China focus like Global Macro the China replication.
Speaker 3: What we did there is exactly what I just described.
Speaker 3: Last year. We were short commodities and we were long
Speaker 3: China equities and unfortunately we were number one opportunistic in
Speaker 3: terms of long China equities last year. Which equities we
Speaker 3: were long the Hongsung tag. We were long China's five hundred.
Speaker 3: Basically we were long index. We don't do individual equities anymore,
Speaker 3: and even more fortunate our exposure in long equities towards
Speaker 3: relatively large in September.
Speaker 2: Oh wow, good timing.
Speaker 3: Yeah. The reason for it in the sense that what
Speaker 3: do we see is that China's growth or Chinese economy
Speaker 3: was definitely not as strong as it used to be.
Speaker 3: But what do we see in more troubling is the
Speaker 3: perception of China. It's terrible. There's a disconnect China definitely.
Speaker 3: Oh yes, China is not going as well. But it's
Speaker 3: China that bad all one says.
Speaker 2: No.
Speaker 3: Actually, I think what need to change is the perception
Speaker 3: of China. Everybody looks for that big stimulus, right, but
Speaker 3: we are not looking for that big stimulus. Word we
Speaker 3: are looking for is the perception change. And we see
Speaker 3: like August last year the Olympics. The Olympics got China
Speaker 3: on the world stage and people see, okay, it's the
Speaker 3: country athletes look at quite normal and they did well.
Speaker 3: And I was also making the argument that into this
Speaker 3: world of social media, perception changed very quickly. In December,
Speaker 3: you have TikTok refugee to Shogunhu to later random and
Speaker 3: that had DeepC right, all of a sudden, the perception
Speaker 3: on China really changed, right. I think that's what it's
Speaker 3: a driving the stock market up. And of course the
Speaker 3: septembers China's a policy change also affected people's perception.
Speaker 2: And it sounds like you're still quite positive on Chinese equities.
Speaker 3: Yeah, opposition is similar right now in the sense we're
Speaker 3: still a long Chine equities, infrastructure, property sensitive commodities. And
Speaker 3: the other thing we did welllast year was I saw
Speaker 3: that Japan definitely is going to raise the interest rate
Speaker 3: because the infliction was really going up. So last year
Speaker 3: we were shouting gdb's and they also made the right argument.
Speaker 3: Last year. We were arguing that the US race was
Speaker 3: going nowhere last year, and so we treated the US
Speaker 3: rates well last year. Well, at the beginning of last year,
Speaker 3: when US race was quite low, a lot of people
Speaker 3: think by in the US bound, they's a really good trade.
Speaker 3: It turned out to be not right last year the
Speaker 3: US race basically when the up came down and went
Speaker 3: up again. And I'm quite lucky in terms of trying
Speaker 3: to think about the Trump's chance of winning or losing.
Speaker 3: Each of the last three elections. So I was thinking
Speaker 3: that Trump's chance of winning last year was much higher
Speaker 3: than the market price in. So we did some Trump triderarily,
Speaker 3: especially the raids of steepeners and the resteeping the work,
Speaker 3: and also some Asian currencies. We think they're actually quite
Speaker 3: good Asian currencies where the treating dynamics will be very
Speaker 3: different from ten years ago or nineteen ninety seven. Yeah,
Speaker 3: so that's right. Now, it's a market to mispress in
Speaker 3: some of that.
Speaker 2: Then I saw you on Bloomberg TV, and you have
Speaker 2: a counter consensus view. You think the market is underpricing
Speaker 2: US rate cuts next year. Yes, can you sort of
Speaker 2: explain more to the listener.
Speaker 3: I don't really know what's going to happen to yesterdays
Speaker 3: this year. I actually invented a term. I coined the term.
Speaker 3: I call it the Poker rule. The Poker rule is
Speaker 3: essentially a combination of Powell with a Voker.
Speaker 1: Okay, so former FED chairman Paul Volker from the seventies
Speaker 1: eighties and then current FED Chairman Dron Powell.
Speaker 3: Right, you think that Powell is facing similar problems Volk
Speaker 3: was facing inflation. Inflation was now that high, right, Volker
Speaker 3: was facing like fifteen percent inflation. Well right now it's
Speaker 3: still like a four or five. So in discussing the
Speaker 3: poker rule, I argued one thing, I don't think the
Speaker 3: market it's current in the sense if you look at Powell,
Speaker 3: it's very different from the fat governor we used to have.
Speaker 3: They were all economists, where Powell is a lawyer by education,
Speaker 3: by training. Right, So what's the difference between economists and lawyer.
Speaker 3: Economists tend to be you know, tough minded guys. They
Speaker 3: have a theory and they have a bias. A Hakage
Speaker 3: governor is always hawkish governor. A Dolfwish governor is always
Speaker 3: doltish governor. Walker is a very hawkish grispand and the
Speaker 3: Brananki are very dolwish. But low Yeer's very different. Lawyer
Speaker 3: does not use their theory to project what's going to happen.
Speaker 3: Lawyer looks at evidence.
Speaker 1: Gotcha. So economists kind of have this bias hawkish or dubbish.
Speaker 1: They lean either way. But Powell is a bit different
Speaker 1: from that. He needs to have data presented to him,
Speaker 1: so maybe could take a bit more time to act.
Speaker 3: Yeah, so this year, what evidence do we have evidence
Speaker 3: is that inflation is still elevated. I this is the
Speaker 3: infliction level. I think it's very reluctant to cut ry.
Speaker 3: But the market pricing harmony right now, pricing more than
Speaker 3: three cuts, and also the teriff's treating big or small.
Speaker 3: It's the inflationary So in this environment, I think the
Speaker 3: market means pricing the fad in the sense that they're
Speaker 3: pricing too many cuts. However, nothing priced in next year,
Speaker 3: but for next year. Remember the fat governor change. I
Speaker 3: think Trump definitely taking someone who's lawyer and who's faithfully
Speaker 3: execute his view. That means lower interest rate. So I
Speaker 3: think the next fat government comes in in May next year,
Speaker 3: the race is going to be cut much lower. And
Speaker 3: they may ask me, okay, what if the inflication remains high, Well,
Speaker 3: we have seen that episode before. The fat can make
Speaker 3: an argument, Oh, you know, the infliction induced the better
Speaker 3: terrific high. The terriff is a one time price high,
Speaker 3: so it's a transitory.
Speaker 1: What about the chances of a very recession though, I
Speaker 1: mean this is all assuming that there won't be a
Speaker 1: session this year, which I mean I don't think any
Speaker 1: economists are pricing in necessarily, but the risk has definitely
Speaker 1: gone up.
Speaker 3: Yeah, with the equity price drop. Now, I've seen some
Speaker 3: analysts calling for recession risk rising from ten percent to
Speaker 3: twenty percent something like that. I think that the Trump's terriffs,
Speaker 3: it's going to definitely increase the chance of a recession
Speaker 3: next year. So this year is somewhat like a stackflation
Speaker 3: in the sense that you increase the tariff, the invlasion
Speaker 3: goes up, the economy weaken somewhat in the stack deflation
Speaker 3: time the second part of poker we're coming to play.
Speaker 3: I argue that with the inflation at this stage, Powell
Speaker 3: is unlikely to cut interestry. There's an angle. Powell is
Speaker 3: a close land the term, and he had done great
Speaker 3: job in the Siviny economy during pandemic, and it also
Speaker 3: raised the interest rate high enough without causing a collapse
Speaker 3: of US economy. I know he deserves the full credit
Speaker 3: and his close to his end term. He doesn't want,
Speaker 3: you know, make a mistake into the cutting too much.
Speaker 3: I think that the market need to price in cut,
Speaker 3: but shouldn't be all in this year and nothing next year, right,
Speaker 3: it should be spread out. Basically, what we're doing now
Speaker 3: is that we are buying the well, We're not exactly.
Speaker 3: Buying butt is similar. We are buying the two year
Speaker 3: point of the US Treasury. Or let's say we are
Speaker 3: betting that two year point rates are going to go
Speaker 3: lower and we're bet one year point actually go higher.
Speaker 3: So in the sense we are doing a one year
Speaker 3: two year cuting technical term one year three flatner right
Speaker 3: now from under this year under next year. The market
Speaker 3: is only pricing in uh last night it was only
Speaker 3: seven basis point, so people say, okay, there'll be no
Speaker 3: cut next year. Okay, So you're basically betting that rates
Speaker 3: will come down a lot more than the market expects
Speaker 3: in twenty twenty six. And just for the listeners out there,
Speaker 3: this is not investment advice, though I don't.
Speaker 4: Know if retail investors can express their views in rates,
Speaker 4: but I wanted to sort of change the topic a bit.
Speaker 2: You're a macro hedge fund based in Hong Kong. Now,
Speaker 2: Hong Kong is home to a lot of hedge funds,
Speaker 2: but they're mostly equity long short and when you think
Speaker 2: of macro hedge funds, you think of you know, Stanley
Speaker 2: Drunken Miller, you know George Soros, litile spaking. They're always
Speaker 2: based in New York, maybe in London. What's it like
Speaker 2: being a macro guy in Hong Kong?
Speaker 3: That feels good. I think it's interesting for the Asia
Speaker 3: macro hatch fund quite a few false starts in ninety seven.
Speaker 3: You have Asian financial crisis. It's supposed to be a
Speaker 3: perfect time for you know, a macro hatch fund, right,
Speaker 3: and then you seven which is not Asia LAD, is
Speaker 3: the US LAD and Asia cutter factors as well. But
Speaker 3: I think that's interesting is if you look at you know,
Speaker 3: Sorrows Drugler, they are quite close to the center backs,
Speaker 3: or at least they understand the fat the BOE much
Speaker 3: better than I would say a guy here, Yes, so
Speaker 3: a guy like us here, we are proud of ourselves
Speaker 3: for understanding PBOC or even BOJ better than those guys.
Speaker 2: Right.
Speaker 3: The interesting thing is that BOJ didn't matter for a
Speaker 3: long time. Japan was like the last decades, the people
Speaker 3: who it doesn't matter either, Well, Beijing's policy matters to
Speaker 3: manufacturing part of the economy. For a long time, it
Speaker 3: did not matter to financial part of the global economy.
Speaker 3: Back in twenty sixteen twenty seventeen, I wrote a piece
Speaker 3: to my masts basically arguing that twenty to fifteenths R
Speaker 3: and B depegging from the US dollar was going to
Speaker 3: have huge impact in ten years, not at that moment.
Speaker 3: So in ten year's time I argued that decisions out
Speaker 3: of Beijing will be as important as, if not more important,
Speaker 3: than decisions out of Washington, New York, Tokyo, London, Berlin, Brussels.
Speaker 3: We are witnesses right now. Not Bejing decisions definitely affects
Speaker 3: the global financial market, not just Chinese market anymore so.
Speaker 3: Being a microphone in this region, we have a certain
Speaker 3: information advantage. Instance of that, or you call it the
Speaker 3: analytics advantage. We understand China much better than most microphounds
Speaker 3: sitting in London and sitting in New York. Beijin used
Speaker 3: to be relatively transparent. That's going to the direction of
Speaker 3: more transparency, but over the last few years it seems
Speaker 3: to be becoming less transparent. So the yin free information
Speaker 3: symmetry for those guys sitting in London in New York.
Speaker 3: For US, we also get less information, but at least
Speaker 3: we are still better connected or closer to understand what's
Speaker 3: happening than those guys in London New York. That's something
Speaker 3: we think it's our advantage.
Speaker 1: What do you think they get wrong? You know, you're
Speaker 1: saying that the folks in New York, in London, what
Speaker 1: do you think they're getting wrong about the PBOC and
Speaker 1: about China right now?
Speaker 3: So for example December in the Central Work Economic Conference
Speaker 3: and they said, okay, we're going to lose the Montreal policy.
Speaker 3: What happened. Yes, that means they may cut a triple
Speaker 3: r the cut interest rate. And if you look at
Speaker 3: the ripple market versus the official rate, the marketing market
Speaker 3: is quite tight right now. The reform market is somewhere
Speaker 3: around one point eight to two percent. Well, the official
Speaker 3: seven day PBOC rate is one point five percent. This
Speaker 3: divergence is actually quite high. If the cutting interest rates,
Speaker 3: the rate should be one two percent. So we are
Speaker 3: looking at, you know, really lose Montibal percent says the
Speaker 3: market price of two percent. And the arybody's arguing, okay,
Speaker 3: this is the temper phenomenon Chinese New Year. The money
Speaker 3: tied after Chinese New Year, the red remained high. The
Speaker 3: reason for other the you know, one is that the
Speaker 3: economy is not that bad, so they're not in a hurry.
Speaker 3: And the other one is the people who have mentioned
Speaker 3: quite a few times the long term Chinese government bound rate.
Speaker 3: It's too low. They did not say specifically too low,
Speaker 3: but they talked about it many times. If you look
Speaker 3: at thertainy year, China's garment bomb right now, it's one
Speaker 3: point eighty percent. Japan is two point three four percent.
Speaker 3: This makes no sense, right, and we understand why it's happening.
Speaker 3: Who's buying it? Why is going that way? I don't
Speaker 3: think that the guy's sitting in londoness And actually it's
Speaker 3: as a matter of fact, we're talking to some investors
Speaker 3: and they said, yeah, you argue that the long term
Speaker 3: of China rates is going to be higher, but this
Speaker 3: has been going lower for the last one year and
Speaker 3: in the bloom of TV. I think that the whole
Speaker 3: asking me that the low long term rate, does that
Speaker 3: signal that people are quite passimistic about China. Well, I say, okay,
Speaker 3: interpret that way, but that's not exactly the right price
Speaker 3: for the China's long term growth. This is a two low.
Speaker 3: So I actually want to position for China reads higher.
Speaker 3: The question is the number one? Is one? The second?
Speaker 3: And what's trigger?
Speaker 2: Right?
Speaker 1: Yeah, what's going to say in how many years and
Speaker 1: how many years.
Speaker 3: I mean for me, like we we have some position
Speaker 3: there as well, and we don't think this is the
Speaker 3: moment a way of back like this isn't going to
Speaker 3: go back to three percent and run them soon, but
Speaker 3: we want to watch for inflation for girls of whether
Speaker 3: there's the girls will continue with the girls continue, Let's
Speaker 3: say the inflation the forecasted the government the lower the
Speaker 3: infliction target two percent. But people interpret that, Okay, you
Speaker 3: know there's a good for a bound that it is
Speaker 3: bad for bomb because the government of Taketi is three
Speaker 3: percent last year. There's no way that we're going to
Speaker 3: reach it last year, right, It's more like a this
Speaker 3: year they lowered it to more appropriate two percent. It's okay,
Speaker 3: we one two percent, right, and they were doing things
Speaker 3: to reach that two percent. The two things one is
Speaker 3: that the encouraged consumption and the other one they are
Speaker 3: doing some sort of now they call it a different
Speaker 3: name called anti involution, anti anti involution, called the fundation.
Speaker 3: And remember back in twenty sixteen theres something called supply
Speaker 3: side reform. This is similar this basically, okay, we have
Speaker 3: so many companies competing for the same market, so the
Speaker 3: overcompetition leads to involution and that's not good for the price,
Speaker 3: and they will have this low inflation or close to
Speaker 3: zero inflation. I wouldn't call it inflation because it's still positive.
Speaker 3: It's a low. So we want to move away from
Speaker 3: that situation. So they are introducing measures to deal with
Speaker 3: this evolution problem and that can potentially get the price higher.
Speaker 3: Let's go back twenty sixteen. The supply sided reform managed
Speaker 3: to reach the CPI from around one point five two
Speaker 3: around two percent basically from the end of twenty fifteen
Speaker 3: to twenty sixteen, the inflation the CPI one top oft
Speaker 3: point five.
Speaker 1: And you think they're going to be able to do
Speaker 1: it again.
Speaker 3: Well, the definitely they're trying. They don't really like this
Speaker 3: deflation country environments. On demand side, they are trying to
Speaker 3: get more money to consumers, and on the supply side
Speaker 3: they are saying, okay, there are old competition, no company
Speaker 3: is making profit, and so you want to deal with it.
Speaker 3: And the way they deal each sector differently. We don't
Speaker 3: know exactly which sector they're going to do, but the
Speaker 3: market is talking about they are going to cut fifteen
Speaker 3: million tons of steel output. They can don't believe in it,
Speaker 3: but you know, we have tried, like the last couple
Speaker 3: of years, but they see year. I don't know, it's
Speaker 3: not because it looks like they are more determined.
Speaker 2: Right.
Speaker 1: So we've been talking about a lot of themes here.
Speaker 1: We're talking about around the world, China, Us, Trump, she
Speaker 1: and talking about how you're playing all this, how you're
Speaker 1: inting as a result. So one of the things, you
Speaker 1: had a great year last year, what about so far
Speaker 1: this year? Because there's so much going on. February was
Speaker 1: not great for a lot of hedge funds. How about
Speaker 1: for you guys?
Speaker 3: Yeah, past the opposite. We did not do well in January,
Speaker 3: but in February we did really well. We made up
Speaker 3: all the losses in January and basically we'll all return
Speaker 3: in February in magnitude double the over January loss.
Speaker 4: That's why you're getting on TV, and that's why that's
Speaker 4: what you're doing.
Speaker 1: Well, you must know what he's talking about.
Speaker 3: Well, knocking on the wood, is it difficult?
Speaker 2: Is micro investing back?
Speaker 3: Yeah? Yeah, definitely. I mean, like the whole invention in
Speaker 3: the world, it's moving from a location to strategy allocation.
Speaker 3: By that, I mean you could light on and simply
Speaker 3: by US stocks in the US bond and you would
Speaker 3: do really well in twenty ten, but the twenty twenties
Speaker 3: that will not work. Twenty twenty is going to you
Speaker 3: need to figure out this strategy. Strategy micro. And if
Speaker 3: we go back to last nineteen ninety, it's really interesting.
Speaker 3: Nineteen ninety two year two thousand, the macro did really well,
Speaker 3: the US equity did really well, and ybog the market
Speaker 3: and the commodity did almost nothing. From two thousand to
Speaker 3: twenty ten, the US actually went nowhere two thousand, two
Speaker 3: thousand and two, twenty seven up and the two thousand
Speaker 3: and nine bargain and the commodity rather hard emote. The
Speaker 3: market did well, and the micro did well as well,
Speaker 3: but from twenty teen twenty twenty, the macro were terrible.
Speaker 3: You could simply buy the US stock and do nothing.
Speaker 2: Like give six seven.
Speaker 3: Yeah, that's because there's a massive printing money because of
Speaker 3: two and eight and the US was printing, the European
Speaker 3: was printing, and then Japan started printing when Abbey Body
Speaker 3: in Crawda right, and those are massive printing drove up
Speaker 3: the US risk assets. But twenty twenty we'll have information
Speaker 3: there's less money slashing around and just so there'll be
Speaker 3: more volatility. The trouble for macurie mashing is that you know,
Speaker 3: in that strong equity world, everyone makes money because most
Speaker 3: of the actually invest a lot. Right, in a period
Speaker 3: where macri masting is good, not all macuri masure will
Speaker 3: make money because basically this is the environment where volatility
Speaker 3: is high. Right, I see a think that more than
Speaker 3: fifty percent of macro in measures will make money and
Speaker 3: someone will make it really big. But the risk is
Speaker 3: also high.
Speaker 2: Well, it's a great way to.
Speaker 1: Making money, but risks are high.
Speaker 4: Yeah they say winners it grins and you can see
Speaker 4: a smile on your face.
Speaker 3: Yeah, well, what's the Well, we're a very traditional micro
Speaker 3: so months the months fluctuation is as high and it's
Speaker 3: really for for investors who have a tolerance for risks.
Speaker 1: Really interesting conversation today. Thanks so much for joining.
Speaker 3: Us, Thanks more having me, and it's a really good
Speaker 3: at pleasure.
Speaker 1: You've been listening to Asia Centric from Bloomberg Intelligence. I'm
Speaker 1: Cottadmitri but in Hong.
Speaker 2: Kong, and I'm John Lee, also in Hong Kong. And
Speaker 2: this podcast was produced and edited by Clara Chen.
Speaker 1: You can find more episodes on Apple Podcasts, Spotify, or
Speaker 1: wherever you listen. See you guys next week.