Hang Seng. This is a pretty strong caveat, I have
to say, in terms of what we heard over the weekend, what we're expecting from
the party Congress. Has any of that changed your outlook on
your strategy for China? In all honesty, we wouldn't looking very
much from the party Congress and true enough, I don't think so to think, if
anything, regarding the let up or Covid-19 or the let up in terms of, you
know, housing market policies, two factors that have weighed on the
economy. But going forward, I think that could
change. It's not going to be a quick dramatic
change. You could change in the next six to nine
months. I think China at some stage will have to
ease up on its Covid policy. I'm ready for it right now.
Perhaps when there's a MRI and a vaccine, you know, sometime early next
year, perhaps you'll be more ready. And when the vaccination rates amongst
the seniors in China increased further, you know, then probably there'll be
more, really. But I think they'll probably move in a
gradual fashion. As far as I know, easing Kobe policy is
consent, and that's been a big drag on the economy.
But having said that, a lot of bad news has been priced into the markets.
The MSCI China is down sharply, and that's the reason why we feel that, you
know, the Chinese equity market is something investors should not ignore.
But at the same time, not be too aggressively there because, you know,
there's going to be still quite a bit of volatility as we lead to this party,
Congress and, you know, other economic policies in the next six months.
Because one of the other things they're starting to see emerge is a tug of war
between governments and central banks, obviously the UK is a prominent casualty
of that battle, at least in China. Do you have the advantage of being on
the same page when it comes to policymaking and hopefully being of a
return to that countercyclical factor resuming to some level of growth?
Absolutely. I think that's China's advantage.
You know, inflation is not running away in China like the US.
The BBC has the ability to do more if it wants to.
The government has the ability to do more with one store.
But having said all that, I think I also caution what quite what came quite
clearly from Xi Jinping, the opening address of the party Congress is that,
you know, I don't think they are looking for a return to rapid growth.
Yes, the Chinese government has a 5.5 percent target to the economy this year,
and economy is probably going to come in at just about 3 percent in terms of
growth this year. But I don't think you're looking to
achieve that five and a half percent target.
I think you're looking for reasonable rules so you will not do anything that
is too aggressive, you know. And so I think it's going to be more
gradual. I mean, they'll do what they can to
support the economy, the housing market. But don't expect fireworks from fiscal
policy or monetary policy in China. It'll be gradual steps.
Looking down the road, this is not an immediate investment idea or avenue, but
when when she vows victory in the tech battle, you know, after the US curve.
It does. You know that that's got to be very
important to build up the chip industry, make a competitive will.
Will there be opportunities for investors?
Do you think China's going to follow through on this?
I would agree that that's something to keep your eye on.
Well, that's something quite clearly the government is quite determined to do.
I mean, they're going to push quite aggressively, invest quite aggressively
in the high technology space. I mean, it takes place in China.
I haven't seen a beating, but it's really in the e-commerce space that's
taken a beating. I mean, because of, you know, pricing
regulations over the last 12, 18 months in China.
But when it comes to high technology, I mean, when it comes to that, you can see
things go and recognizes that it is something we have to invest by investing
quite aggressively. I don't think that opportunity's
immediate. It's something to keep in mind.
But it's quite clear that the Chinese government will focus on this area.
They recognize the fact that there's a lot of pushback from the US.
And so it's one area that we better put in money, invest and take on the US and
devote the effort to it to stay competitive and to keep China's status
as a superpower. So I have to ask you about yen.
What do you think's going to happen there?
Continue to weaken bold action from the government.
Is it going to stall out for a while again?
Well, you know, I mean, the thing is, it's really not over yet.
It's really about the US dollar. And so the question to ask is, you know,
will the U.S. dollar continue to get high?
I mean, that's the way we see it. And yes, it looks like the U.S.
dollar will get higher. I mean, we are now projecting that, you
know, there'll be 275 basis point rate hikes in November and December and who
knows perhaps even more if inflation doesn't come down.
Yeah. So, you know, given that backdrop, the
U.S. dollar is likely to strengthen further.
That's going to pose headaches for the ministry of Finance and the central bank
in Japan. So, you know, I was just listening to
your show. And again, you talked about 150 to the
U.S. dollar.
I mean, I wouldn't be surprised if that happens because the dollar is fairly
strong and yet no reason for the dollar to, you know, take a step back because
interest rates in the U.S. are likely to get high end.
You could see more supersized. So these five basis point rate hikes in
the coming months.