Let's get to our guests. Olivia Dossier, head of applied research for a pack at Contigo. He's on the line from Singapore. Olivier, thanks for being with us. I'm wondering whether you're advising clients in the current environment. Hey, let's avoid China, put money to work in the US. Are you doing that? I think you know that the issues with investing in China is not uh, nothing to do
with what's happened this week right there. The COVID policy is holding people back because obviously you can't forecast consumer demand when you can't forecast if they'll be able to go shop. So I think that's been holding investors back for from now. You had a couple of weeks of good markets in China when the regulators were being very you know, pro growth after the reopening of the previous lockdown.
But that's not enough to carry people people back, especially when you know the U S or other markets are doing very well. Not enough to carry people back the hubs in July when we saw that huge underperform. But when we're looking ahead to you know, this very important Congress in China and expected more stimulus, particularly to try and support the property sector. Could you say we are going to see some more rallying coming through into the
end of the year. It's possible because again, regulators can make a big difference in at least with local investors. There is still a very big question mark about the health of the real estate UH sector in China, and the debt burden and US interest races still going up to anything with US denominated debt is going to be
something to avoid UH, regardless of what happens UH. So you know you're going to get the usual around October type of rally from from from local investors, but it's not going to be enough to woo foreign investors back in for especially when they're making such great games outside of China. Now, yeah, a tough call to I mean for markets in the region that are heavily dependent on a strong Chinese economy. I'm thinking of South Korea as one example. But I don't want to speak or what
we're in your mouth. Are there opportunities in the Asia Pacific that you like right now outside of China. It's difficult because, as you say, China is a big piece of the puzzle for a lot of the countries around UH, around Asia Pacific, So obviously that's a that's an issue. The Japan UH market is also a little bit troubling because you know, the end is way too weak. The central bank there has not yet moved against inflation, and
consumers are feeling the pain the longer at last. UH. You know that they power six the GDP in that country. So if you don't look after consumers interest, you're in trouble down the road. So I think there's question marks now about the economy in Japan as well, especially after the summer is over. We've been looking at the OPEC Plus meeting, which just had that modest increase in supply in oil. UH. What does that mean for crude oil prices in this cycle and other risk assets that we
kind of reached peak oil. I think that's a good news obviously for for risk assets in general, because obviously how much people pay at the pump will eat into their consumption budgets and that eventually will feed to lower
demand for other products. Right. So, so far the earning season has shown that companies have been able to pass on higher costs through higher prices and consumers have been willing to pay for But if if gas of the bump stays high for for a long period of time, they increasingly will not be able to pay or not be willing to pay higher prices for other goods. So, uh,
lower gas prices is good news for the market for sure. Yeah, we had the news in the U S session that the American government reported an unexpected building inventories for both crude and gasoline. So maybe we're seeing a bit of demand destruction the consequence perhaps of FED tightening. Where are you with with the FEDS strategy right now? And do you expect hard landing? Do you are you forecasting recession?
So what we see is that the consensus into one among investors with that inflation was winning, Inflation was beating central bank uh. So central banks got very aggressive in Q two, announced the very aggressive second half as well, and by the end of Q two by June. The end of June, investors felt that it could end in
a draw. Right, So what they did was rebalance their portfolios because their portfolios had been position for a worst case scenario during Q one UH, and now we saw in July the switched to a base case scenario where inflation and the FED might end in a draw. The next question is what about the FED and the economy night So far, Uh, this is also looking like a draw. We're getting mixed messages on the macro front, but mostly positive ones. We're getting positive news on the earning front.
So as long as unemployment, as long as you know, the economy remains a full employment, people will have money to pay for for for goods, even if the prices is a little higher. So I think that's going to be the switch that we're going to see from for investors in terms of focus. They're gonna look more at the employment numbers, the economic number, growth numbers, rather than
inflation going forward. I think if that's going to take care of that, and they'll focus on whether or not people will have, you know, wages to pay for for increased prices. You point out that we're expecting tightening from central banks pretty much globally acceptable. We've touched on China and the b o J. You say it doesn't seem to have gotten the memo. When could we potentially see
a change in strategy from the Bank of Japan. I think, you know, in Japan, it's going to be up to the consumers to send that message to to the b o J. Uh, obviously after the summer and the end of the tourist season the weekend. Uh, you know, Uh, it's not going to be a main factor, but consumers control and consumer spending a sixt GDP in Japan. If they don't, if they stop going to the stores, if
they stop buying, the bog will get the message. Olivia, we had a historic visit this week from HOW Speaker Nancy Pelosi to Taiwan and subsequent response from China that was I think fair to say a little angry. Markets
were on edge as a result of that. Do you think China will drive a wedge deeper into some of these important relationships, whether it's Taiwan in and of itself for the US, I think, you know, the U S China relationship is obviously a big h to your political impact for for investors, but it's background noise right now, still earning this front. Uh noise. So is the Fed. So is inflation. So I don't I don't perceive a lot of movement from that. It depends if the situation
between the US and China gets worse. Right, it got really bad when when we had the trade war under Resident Trumps, we thought it might be better under a Biden. It hasn't. Will it get even worse? That is the big question. And so far it's all the response we're seeing. It's China Taiwan response. We're not really seeing a U. S. China response yet from them, so the market is going to ignore that. Alright. Oh, it's great to have your insights.
Thank you so much. Olivia Dosia has head over applied research for APEC from Kintingo on the line for US from Singapore,