Kathleen Hays on Jackson Hole (Audio)

expect to see from authorities today it's the LPR. But what's your view in terms of further stimulus we can see here? Yes, I think we we think that is going to have to look beyond monetary policies and in ten vis this point, I don't think is going to be significant given that we've seen most of the data. Is thing. Actually, demand for credit isn't the problem. Uh, you know, there isn't any command that much credit. What

you're saying, the cost of credit in the problem. So what we're looking for is for them to go beyond this and actually start look giving us some more fiscal stimulus, preferably from the central government. And what would that look like? What would you expect there. I think we'd like obviously more infrastructive men. We'd like much more concerted, coordinated effort

to help them, you know, property sector. I know that there's lots that have been announced, but I think we can definitely see that with from the data ware thing is that that that's not really feeling through, and you know, on the physical market has to turn around before you can get much more confidence that the economy and is on a more steady foot Ed was talking there in the news about Singapore relaxing some of the COVID restrictions, which will pretty much bring Singapore back to pre pandemic

levels then, and that has been a very vast turnaround in the last year when we still had borders shop this time last year. When do you see China making such an incredible pivot And how is that going to change the dial here in terms of opening up the economy and creating broader economic growth when we're so far

from that five and a half percent target. Yes, I think it's going to have to depend a lot on if they can get a vaccination a bit better, and of course maybe potentially some some drugs that would be helped, you know, helpful for for the COVID situation for those who have not been vaccinated. So I think, I mean, what I'm hearing is that that that could be on the cars for early part of next year, obviously after

the national part of progress as well. So I think that could be what we're looking at to see where things could really turn around for COVID policy. UM And I think sometimes when we're feeling very low about China, remind myself that only Chinuary this year, I was feeling very depressed about Singapore and thinking, are we're ab going to to resume normality? And what we do see is that when we do resume normality, it happens very quick

and very fast. And I think that's that's what we have to kind of hold onto the back, that once things are very place, we can cut around very quickly, very fast turn around here in in Singapore. But when it comes to the overall Chinese economic outlook, what what is your forecast there in terms of growth? I mean the five and the cent target has certainly been ditched, but you more in that band of say three point

nine four point five percent? What's your outlook for China much closer to the three uh handle than than a four handle, given you know, everything we've seen, and given the fact that the some of these things that beyond their control as well, particularly you mentioned, should try on

the climate issue. I think we're beginning, I mean to look at climate um not only UM here in China, but even you know, when we look across your you know, it is a big factor, one that I think could actually be much have a much more longer impact on inflation.

When we think about particular region, put inflations will be very very key, and some of these climates that we're seeing, you know, could have quite a major impact in that particularly you know, as to say, the harvest season now, but this feeds into next year and the post the gas prices and fertilizers. So again, climate inflation still very much on the radar for this region. All right, Let's

talk about the China bond market. When you look at shares in China, they're down about six percent over the past month, whereas an MSCI gauge tracking the rest of developing markets is up about seven percent. And it's similar in the bond market, with Chinese debt up just about one percent compared with a four percent return for emerging markets.

When does that I guess divergence change. Um. I think we need to see the physical market a particular property in China to turn around, and that's going to be very difficult. As we mentioned talked a little bit earlier bout COVID policy. Right, so you can put similars and stuff in place, but you know, until people have confidence in uh that in the economy and the physical market is better, I think that's hard. That's the first step that that needs to get taken. And then obviously a

number of steps that can be done in policy. Again, some fiscal stimulus I mentioned, as well as much more coordinated policy around funding. These all those things that would need to help, you know, give that sector a much firm of footing, and then of course hopefully few through to the rest of the economy, but none are quite there. Yeah, A lot of it is about the property sector. As you say, when do you see a potential peak in defaults?

And I guess the worst behind us in the property sector, um, I mean the faults are pretty you know, they're high already. Hopefully we are definitely at the bottom, if you know, if not, and certainly for the policy makers that that is their direction is definitely to make sure that you know, we don't decelerate anymore and hopefully turn around. But I said, what can determine that is going to be the physical market, and that is still very cloudy at this moment um,

not very clear. We're looking to how we're looking ahead to Jackson Hole two and what we're going to hear from the fair and how that plays into the rest of the globe. I guess you're talking about looking for some opportunity in in some other e M s, but also in Indian high yield. Tell us what you like there, Yeah, but I mean I think we I mean, then homes is holding up quite well. Uh, Commodity, I mean, certainly with oil a bit lower, that's that's helpful for that.

But I think just structurally some of the companies there are just kind of quite well positioned. There's particularly that market, some of the still companies that were looking at there, and and a lot of the renewables you know, again very structurally a good strong demand and they're feeding into the whole idea that climate mitigation. Climate risk is going to be something that you know, it's big on investor's mind. If we do see the FAIR succeed in clamping down

on inflation without causing a recession. What kind of areas of Asian credit do you see is benefiting here? So I'd say most of the most of Asia credit would be actually a big met The i G obviously UM

segment doing very well. Most of the companies they're including Chinese company actually even benefit from that because UM you're dislike the slowing of the economy, and in terms of the most investment grade the fundamentals are so the the companies themselves are actually quite quite strong, So that could that would also benefit, and say within high use segments of it away from you know, commodity names in Indonesia

and India all benefiting. The only area that's a very destocratic would be Chinese property and that's going to need um, you know, very much more Chinese policy makers to work on that side. And are you confident that the FAIR is going to achieve its target or are we facing potentially a big deep procession. I actually I think that they are doing the right things. Certainly, they're giving the market the very strong signal that they do not want

inflation UM expectations to be embedded. And if that caused the market to bobble. It's probably going to be better than it would be if they let the inflation out of control. So I think of the two evils, I think the tackling inflation is probably going to be much more better for the market in the long run, and certainly need to make sure that we don't get embedded two. Has been great to have you on. Thank you so

much for your insights. Too hard Out is head of Fixed Income Asia, Rebecca joining us from Singapore here on Bloomberg Daybreak Asia