Just build on what the chanting we're just talking about this rebound that
we're seeing in China continue to build or is this all just sort of short
covering. Right.
I think in terms of the market of course we have seen lots of the headwind in
terms of the economic growth so far this year but incrementally where we're
looking to the earnings ratio and we start to see some positive earnings
erosion. In particular some kind of sectors.
So I think that's already we might see a decent kind of potential recovery on the
market in particular where we see some potential kind of PPA CPI trend.
It's what we probably see some kind of potential changes in terms of the cost
inflation but facing the Chinese enterprises.
So we might be able to see a bruising can operate Yvonne Man for a second half
for some of the some of these sectors in particular industrial or some of even
some of the consumer staples. There could be some potential kind of
improvement in terms of their margin for us.
So that was selling provide a good setup for the market to recover gradually from
from now on. OK we have a very colorful chart that
we're about to play. It looks a bit confusing but really all
you need to look at is is those blue bars out there which basically you look
at sector by sector in China this year there's only one sector that actually
has been outperforming and the only one standing which is energy.
Does that continue to be the case or as you say it's very hard to pick out some
of these kind of bargains and other other places.
Yeah I would imagine we could probably see some potential kind of sale for some
of the performers in sectors like. But to go those being hard hit by this
kind of strong pick up in energy costs and where we're looking to lace 3Q for
keel we do see a kind of good potential for some of these midstream sectors to
pick up in terms of performance for say for example as I mention of industrial
and consumer staple some of the things I do from a soft and they kind of import
cars which we expect going into place with your forecast.
And we do see some of these kind of you know companies have shown a strong level
of resilience in protecting margins during the right detailed time.
So when we see it when we start to see some kind of softening in terms of input
goes into Q4. Q They may be able to do that too often.
So to achieve it better margins that would be a good support to the over
performance and enter into the second half.
On the other hand downstream sectors like consumer discretionary we might go
ahead. We as we need to see a strong pickup in
overall consumer demand before we start to see a good pickup intent from top
line. So back to your question.
We do expect there could be some good chance for the reversal of these sector
performers getting into the second half of this year.
We were just talking to Lansing about that weaker renminbi how it has a pretty
strong correlation with how the performance of MSCI China does.
How big of a concern is a weaker currency to you.
Well we do look at it like the impacts on the underlying profit forest for the
names that we own of course for those names that because very much on the
domestic market that currency weakness is going to translate into like
devaluation impacts rather than the underlying performance.
So when we don't do it we do have some kind of location based on our currency
outlook in terms of the asset allocation front.
But when we look into the equity side we do focus more on the kind of real
fundamental earnings of individual companies.
And we're just about a month and a few days away from from the party Congress.
Lillian I have to ask you how your your positioning ahead of that and should I
assume that investing conditions actually improved materially after this
big event. Why or why not.
I think read to get in to a very kind of low investor kind of expectation on lots
of things. When we entered into like the last month
or so I'd thought when looking to the investor sentiment.
There's lots of wishful kind of expectation that there will be some
potential realization about this year of corporate policy.
That's how I look at the actual kind of stock market performance.
I would say that you miss that kind of accomplishment roommate at your pretty
low. So if there's any kind of potential you
kind of relaxation we do see that repeat translate into a thesis.
A good surprise to the market. Yeah investor expectations are quite the
moment.