Just all the signs that we're seeing with re-opening properties support.
This time it's with these bad debt managers that are kind of working with
the BBC regulators to offer that more support.
How confident are you of this turnaround that we're seeing?
I think to begin with, we do see the policy changed in terms of stance
compared to last year. So first of all, they've become a lot
more pro-growth and to some extent pro-business.
And if you can, one could assume into property, they have been trying to
provide a lot more findings and support from loans, bank debts, debt market and
access to even allowing them to issue equities for refinancing purposes in the
oil market. And recently, we also see some of the
state owned bank working with developers in the offshore market and potentially
providing support on financing whilst using some of the onshore assets as kind
of leverage as well. That was quite a big rally when it comes
to junk bonds in China as well. I think, you know, a lot less at least
some of these developers are under 20 cents the dollar now, which was kind of
a norm last year. As crazy as it sounds.
And so we're we're coming out of this kind of deeply distressed territory.
Do you think that can continue? OK, I think there's two parts of it.
One is the financing support that I've talked about earlier on.
But we also need to be mindful that it's only for the high quality developers and
they have a white list that potentially other companies of high quality
likelihood of survival is higher. So they're willing to extend support to
some of these company wells. On the other hand, we're looking at the
fiscal market, particularly on the contract itself, size.
It's still quite weak. So it probably will take some time
before the contract sells or the fiscal market rebound.
And that's why we start seeing a lot of kind of supply demand policy coming
through, loading onto in terms of mortgage rates, encouraging homebuyers
to come back to the market. But at the end of the day, we do need to
look at the whole macro picture, given the kind of witnesses, some of the
economic backdrop that people the propensity of people to go into the
property market to purchase property would be highly hinges in terms of the
economic recovery as well. So you're staying on high quality
companies, not just in property that you're looking at.
Tech casinos like to. Right.
So that's probably more hinges on the reopening story that we've been talked
about a lot in the market at the moment. That really kind of a boost.
Several sectors, consumption, particularly domestic consumption.
We we also think that is likely to boost tourism, Macao gaming, which I think for
the past two years have been in the quite difficult time because they have
heavily reliant on Chinese tourists. Hopefully as we move into this year,
they'll probably have a little bit of a better operating environment.
I think finally, the Central Economic Working Conference also highlight a few
sector, which is the private sector as well as the tech sector.
We also see some of the kind of a risk regulated at risk regulation risk
related to sector tech sectors or we've already peaked as well.
OK. A lot of what we're seeing spreads kind
of narrow, but it's also because of the Fed story as well.
We had two guys yesterday to say, look, I'm confident of the China reopening
story. I'm not as confident what's going on in
the US or Europe where, you know, he was saying things are just priced to
perfection. Are you confident on the Fed downshift,
too? I think there is.
Well, I think last year a lot of us trying to get this right and I think has
proven it was quite challenging to kind of get the duration call.
Right. And I think what we have been seeing now
is that we start seeing inflation data peaking and that's coming through on on
the actual data. So that's, first of all, a good sign.
I think the other thing we also need to be mindful of is the China reopening.
Is that going to have any impact in terms of the global inflation outlook,
which potentially will be another consideration for the Fed when it comes
to that decision in terms of the rates? But overall, we do think as we move into
where we are now, 2023 duration risk is very attractive right now.
So for our fixed income capabilities, we're looking to be gradually bling
adding on in terms of duration.