We're going to flash the forecasts of some of the sell side on the street here
for next year growth forecast. I'm just wondering what you make of
where people think the economy will be next year.
I think most people are going for five percent, but I think the major
difference would be in the first half. You know, obviously, China surprised
everybody by reopening in a very sudden abrupt way.
So I see in the next couple of months, you know, the infection cases is going
to go up and therefore it's going to disrupt production.
Is even going to disrupt consumption as well.
So because of that, you know, the first half, you know, could be anybody's
guess. But and, you know, things just start to
recover in the second half. So I think 5 percent would be a nice
sort of around number to look at for next year.
But as we continue to see where these cases pick up, I'm just wondering, are
you confident that they kind of can continue to reopen at the pace that
workforces are? Well, we pass, you know, the point where
we can sell off, you know, locked down everybody, because, you know, now the
case is a number of cases substantially higher than the official number.
Obviously, if you're in Beijing, you know, basically if you look at the reach
at Friend Circle, everybody's showing that, you know, two strikes, a rapid
anti antigen test. So I would say that, you know, we're
past the point of no return. So now is just, you know, how fast we
can get over this, the first ramp. And then according to overseas
experience, there tend to be like two waves or even three following the first
big wave. So it really depends on how fast we can
get over this. The the expectation is and I was looking
at earnings revisions in markets on MSCI.
It seems like we've bought and you've seen revisions start to pick up.
If we'll hit a soft patch in the economy in the next four months, are markets
overly optimistic about about an earnings bottom being behind us?
I think earnings growth is is about to bottom ISE.
But it's about to bite about to bottom, but is not yet biting.
You know, if we're going for 5 percent for next year, then it is quite likely
that according to historical correlation, then you should get close
to 10 percent U.P.S. growth year on year.
So and I think most of that growth would be concentrated in the second half of
next year. So I wouldn't say that, you know, the
market is too optimistic. You know, the market is still in in the
mood, you know, to to repair much of the damage being done in October.
Right. So we have a huge sell off in October.
And now we're just, you know, Alix Steel trying to get back to normal.
We've been talking about this kind of rotation out of credit, out of
government bonds into the equity market. And you're starting to see more signs
that that authorities need to step in to buy bonds.
Does that work in stabilizing the market in any way?
I think, you know, if you look at the if you look at the wealth management
product market. Right.
So, you know, some of the WP is actually down close to 20 percent on a weekly
basis. So it is a very substantial draw down
for one of the safest financial instruments in the Chinese market.
So the government has to step in. So that's number one.
And I think point number two really is that we've seen this movie before.
So the episodes in the past where we've seen the plunging WPI value and then the
government come into rescue and then things come back to normal.
So I think there's still a lot of instruments that the government can
deploy. So expansion of the PSL, for example,
lowering the interest rate further and also cut to power further in all of this
is gonna work over time, you know. But for now, because, you know, the
Covid case is still rising, we're still getting hit by the first wave.
So, you know, this easing policy is not being very effective just now.
Yeah, well, I was going to ask I'll use that as a jumping off point.
You just put out a note this morning. I got my inbox.
Yes, QE. Yeah.
China's QE. Yeah.
A lot of people talking about having to try to need QE.
And why are we talking about that now? Yes and no.
All right. So it really depends on, you know, how
fast can consumption recover. So if you look into next year, you're
not going to see exports growth as strong as the first half of 2010 to
investment sort of shaky ish. Right.
So gunman doesn't have a lot of money to spend.
So all that's left is the Chinese consumption and tennis consumption is
hit this year. Know, because people just don't have
jobs or incomes or prospects. People are being locked down at home.
So I think going into next year, if consumption is not coming back fast,
then there is a chance there is a chance that, you know, we can distribute
consumption coupon like, well, yeah. Ryssdal We give, you know, one Shery Ahn
John was off coupon and let people spend it.
And people to feel happy. And then gradually the confidence kind
of come back, etcetera, etcetera. And there's a lot of debate about, you
know, this whole reopening story is positive for.
What is for the renminbi as well, but also there is also that tourism outflow
that could happen once China reopens. The narrowing of the trade surplus as
well. Is it good or bad for renminbi?
You think in the way as long as economic growth
comes back, you know, it's gonna be supportive for the gun.
And that's why I think, you know, even for the currency market.
Right. So the U.N.
has strengthened substantially from seven point four at the lowest point to
now below 7. So, you know, there is a chance that,
you know, you know, as we go into next year, as people's confidence is starting
to build, capital flow coming back, started coming back to China, then I'm
just surprised to see that the currency strengthened further from here.
Very quickly before I let you go. Twenty thousand under Hang Seng in
the. Just to clarify, the alpaca bet was
thirty thousand thirty thousand llama. We need to work hard at it.
Yeah. Do we get into a llama costume?
Twenty five thousand a year and one in five thousand before year end.
Yeah, that is eight days roughly. Even though we hope so.
But it's unlikely.