Mark Konyn on the Markets (Radio)

is a little bit of a ways off there. Trying to force the balls into hibernation, I think, and we haven't quite got there yet. We saw in July when there was perhaps a misinterpretation of what j. Powe was intending in his comments and the market rallied very strongly. That's the sort of ralluy that can cause the imbalances that I guess the FED is trying to avoid. We're sort of moving away from when we might see a FED pivot and more towards a FED pause. What is

something that needs to break for that to happen. Well, I think markets are orderly and we need to see signs that the economy is slowing um. There's a lot of intense focus on the jobs data, and of course jobs are a lagging indicator of economic activity, and as we know historically, when jobs do turn they are just quite quickly. In the United States, it's a very flexible

employment structure. So as the higher rates continue to click on and has an impact on consumption and the growth in the economy, then I think we'll start to see expectations start to bottom out, and generally speaking before you hit the bottom in the economy, up to six months before equity markets start to anticipate that and move forward. But we haven't really seen the adjustment in earnings expectations.

Markets are generally not very good at turning points, and we haven't seen the d rating that perhaps is justified given where we are in the cycle, and US officials continue to say that they're doing what's right for the US and by product is the strengthen the dollar, and it has been basically destroying everything in its path. Do you see any sort of concerted involvement of the Treasury

and central banks at some point? The dollar wrecking ball, our currency, your problem, and nothing much has changed through history, But we have seen times historically where there has been a coming together of of officials globally to arrest the path of a particular currency. Whether or not we're at one of those points remains to be seen because policy has been lagging in large parts of the world, including including here in Asia. Mark Conan is chief investment officer

at AI, a group joining us in Hong Kong. And we're talking about the strength of the dollar, you say, our dollar your problem. But when it comes to what we are seeing across Asia, as Doug was mentioning that weakness in the yen, whether or not we're going to see intervention there, and the weakness in the one ahead of the Bank of Career decision as well, how much does this just complicate things for Asia and is it

going to be similar to what we saw in seven. No, I don't think we've got a nine seven type situation. We don't have the offshore liabilities that drove that crisis US. But what we do have is lagging policy in this

part of the world. Typically, as as economies have emerged later from COVID, some yet to fully emerge, and therefore authorities central banks have been keen to see a lagging in terms of policy monetary policy relative to the US, and that has obviously put more strength in the sales of the dollar, and it does it does cause problems, but I think now we're going to be in a period of catch up. I think police policy is in

the process of being tightening. We're seeing the bank of career meet I think today, and we're expecting a half point rise there. For those exporting countries that rely on exports to the to the developed world in high valuated goods like career, like Taiwan, I think they are going to struggle economically. And I think if you look at a if you look at an economy, you look at an equity strategy across this region, those markets will tend

to be underweighted as a result. So we've seen utilities in the US, for instance, fall on much in the past month, and when they when they start selling all the defensive sect as you know, you're you're probably getting close to a capitulation moment. In your view, what does capitulation look like, given that we've had a lot of this and we've seen it coming, does it get really bad or does it just grind on? Well, it's been a bit of a grind with some false hope being

expressed in baar market rallies. The July rally which I mentioned earlier was a very significant one which has now been drained out, forcing forcing the balls into hibernation. Unfortunately, Brian, the last leg is generally the most painful, as the realization of slowing earnings comes through with the prospect of a d rating on equity markets. That's when the last the last strains, if you like, the last remnants of ball of the ball market are squeezed out, and that's

where you see the biggest decline. That decline then as preludes or or it is a prelude for a recovery later on once as we start to see anticipation at the bottom of the economy being reached, and generally equity markets recover an anticipation of that. So, Marke, we're looking ahead to the China Party Congress and as you rightly point out, there could be a rally after President she speech if we see some more policy support. But how sustainable is that? What is the outlook in your view

for China equities. Yeah, China equities are a very unloved asset class, both domestically and internationally, and as we're seeing the sort of anti China sentiment is driving a lot of that outside in North America and in Europe. UM. It's been a tough time obviously with the with the property market debacle and the debt problem there in in China. At the same time, you've got the external sector pretty weak UM, and you've got limited policy response because of

the imbalances that are being being addressed. I think most people are focused on the conquest in terms of the of the realignment of the leadership, perhaps a bit too much. What we're looking for there is continuity, which is particularly relevant at this time when there are some significant headwinds

that need to be encountered and policy challenges. The reality years we're not going to see the fullness of what the policy is being set at until we get well past the Congress out until next March, yes for the MPC, so it's going to be a slow drip. However, markets may do what they often do is a bit of short covering. If we see some signs of encouragement from She's opening, will Jping re embrace the capitalists I'm not thinking. I'm not sure overtly that is that is top of

the agenda. I think what what top of the agenda is confidence in the leadership, continuity in the leadership, a commitment to common prosperity of you know, a real focus on some of the key tenants of the policy to date, getting better balance within the domestic economy. That's sort of a nu right. So in short, yes, Brian no Mark, thank you and thanks for coming into our Hong Kong studio market and its chief investment officer at a I a Group with us in Hong Kong here on Bloomberg Daybreak Asia