Our guest is Puja Maleek, partner at Nippon Capital. Put you by my account, depending on what you look at. We've had six two percent rallies in a day this year, and we're still in the midst of a bear market. We're down about twenty three odd percent or so if you look at major benchmarks. But the thing is that one of these days, one of these will find some traction. My guesses were not here yet, But what's your what's your analysis? Hi, good morning, and thank you for having me.
I agree with you. I think these are bear market rallies. The first set of rallies were definitely driven by shot covering, and you saw it a lot of that globally as well as in Asia. This current rally that you're seeing in China since late yesterday and possibly today is being driven by the government announcing measures to support the market, either directly auto mutual funds and changes in policies and
encouraging companies to do buy backs, et cetera. I think that these rallies are more likely shot lived because eventually the market will look through to earnings before they can be a sustained Rather, I was gonna say, I mean obviously we're going to look at earnings as well. But with regards to some of the support that we are expecting to see from authorities, because people were a little disappointed from the Congress, what further supporter are you expecting it?
And I guess what kind of moves can we see in China's economy given we're all a little bit on tenter hooks that the third quarter GDP was delayed, right and you know, the academic research shows that when companies delayed reporting is generally a bad sign they have bad news to report, and the same probably transfers over to
governments as well. But coming back to your question, what signs can we expect to see from the government, I think we could see more direct buying by the national team itself, but more likely, I think we're likely to see continued stimulus helping the property market, helping chip companies, helping green economy, but also sectors like pharma that will
enable this common prosperity dream to come through. So I think we's a sustained set of measures, but unfortunately for the market, I don't think it's all going to come as a big package on one day. Your analysis of President she's speech. You know, there was obviously a lot in there that could be deemed as somewhat negative for markets, So there was some that could be seen as positive. But net net, in terms of policy, is policy going to be our friend going forward or our enemy. It's
going to depend on which sector you're investing in. So I think the megacap text dooks. There's still a ton of policy uncertainty. Even though she very clearly said that innovation from technology is going to drive growth, it's not necessarily clear that it's going to come from the megacap stocks. It's more likely going to come from the very hardware software intense midcaps that the government is going to support, as opposed to ten cent Ali Baba bay Do, where
the government is still wide about consolidation of power. On the other hand, there will be sectors that the government will support. Um. You know, we talked about that right, renewables being one, for my being another, and I think eventually property as well. We'll get government support, maybe not right now, but over the next six or twelve months.
So as we've seen with this Bloomberg economic projections, the chance of a US recession next year, but as Brian alluded to Bank of America as Brian moynihan says, consumer showing little weakness. Is the consumer enough to kind of buffer a very strong economic downturn? Juliet, I think the fact that the U. S. Consumer is still strong is just a sign that that shoe hasn't dropped us yet.
I think this is more of a timing thing because given where inflation is, you know, still close to at some point we will likely see calculation from the U. S. Consumer um and you see this in markets as well. Right Emerging markets are down almost for from their peak in February one, but the world and the US is down only six over that time period. Definitely, the strength of the consumer has helped, but I don't think we can count on that continuing over the next twelve months.
Can you make the case that inflation has already turned but because of the lag defect, particularly of owner's equivalent rent, which is not really rents paid by people, but it's more like looking at property prices, and they have come down. We already know that. Can we assume that you know that somewhere in the next little period you're going to see a big downturn in inflation. Uh, and you might as well try to get out in front of it.
I doubt that because in the US inflation is being driven by oil prices energy and by food inflation, and both of those issues still persist. Brian oil is still at ninety dollars. You saw pack announced the cunt recently, and the agricultural supply chain is still very constrained. So unless we don't see those two issues resolving, I don't see how inflation comes down. I wanted to get your thoughts. You've touched on emerging markets there, but where you're seeing
significant opportunities for out performance. I know in the notes you've you've given us you've touched on Korea and Brazil. What are you saying? I think the real story in emerging markets is the dispersion. So Korea is down forty five, and Korea is really a high data play geared to the global economy, and so today you're seeing, for example, the castag bounce back up two percent, just in line with the US, and so Korea is just a high beta recovery play. I think it's still early to buy Korea.
I would wait to see more signs of a global recovery before getting into Korea. But coming back to the real point and dispersion. While Korea is down, for Indonesia is down only four percent, and Brazil is up. And a lot of this performance differential is based on differences in expected EPs growth. So the way we're seeing opportunity is in stocks that are domestically oriented in resilience sectors,
quasi monopoly situations, and structural growth. So a good example is, you know a stock we've wanted for a long time called Al Hamadi Holding, which is a hospital operator in Saudi Arabia benefiting from COVID recovery as people are coming back to the hospital for elective procedures, and so very domestically oriented stock, resilience sector, healthcare, quasi monopoly and structural growth.
So that stock, for example, is up fifty year to date Juliet And that dispersion is the opportunity in the air. So what will we see move first? There will be the dollar, for instance, or will it be bond yields coming down to give us a sign that a lot of the pressure that's being um you know, voisted on the global economy will ease. That's a good question because as we look to next year, That's something we're thinking about as well, which is what is the catalyst going
to be for a recovery. And the catalysts can be earnings, so when you start seeing, you know, earnings bounce back, and of course the market will price that maybe six months ahead of time. All the other catalysts can be um regulatory political news either from China or a FED pivot as well, right when you start seeing signs of the FED slowdown. However, we're not seeing any of those catalysts as yet, so I think we're in this wildtile market for a while. Bran Pud are great to have
your insights. Thanks for joining us on Daybreak Asia. Pujamaliks, partner at Nippon Capital, joining us from Menlo Park, California, here on Bloomberg Daybreak Asia