Let's get to our guests, right. Heil China is chief investment officer at mary as Set Global Investments, joining us in our Hong Kong studio. We want to talk about your views on investing in Asia and particularly how investable China is. But just getting to the broader picture of fair officials stressing their commitment to defeating inflation here, how much is kind of pipe hike priced in excuse me,
into markets that we could see another aggressive hike. So I think what Fred is on the stub around is it's kind of a front end a lot of hikes. And that's come because for the last couple of years Fred was more worried about deflation than inflation. And look, a fair bit of hikes have been frontended. Markets are priced in. What markets are now watching is or what
impact does it have on economic data? So clearly we've seen Europe slow down, China slowed down to it's it's the U S consumer US business pens which are holding on our view is by early two thwenty three valty some signs of slow don't over there also, indeed, and when each point to the data, the jobs market is certainly key as well. We're looking ahead to that a d P report and then the key jobs number as well.
When we start to see a slowdown in the consumer, how much does that kind of just add to these concerns about a recession. So I think clearly once there is a bit of a slowdown, But argue is this recission is going to be shallow because unlike the previous cycle, which is the two eight cycle, they're not many economic exercis. In fact, the problem in the world was that last ten years China or invested and the rest of the
world did not invest. So if at all this this slowdown recission happens, I think it's going to be a couple of quarters of a shallow cycle. The other key issue for investors is what's happening with gear politics, And we saw Taiwanese soldiers firing shots toward off these civilian drones that were flying close to the islands controlled by Taipei near China. When you look at the gear political risk, is that just another reason to kind of stay away from markets at the moment or are you trying to
head you? So I think clearly this is this is a challenged situation managing money in these times. The tailers have become a lot more fat fatter, as they say, And I think if one sees some of these risks kind of a materializing, one may have to change positions very very quickly. But at this point of time, I think both sides are mature and I don't see a
major escalation on this part. All right, Let's get to the China story though, because as we're talking about a potential pile up of problems, could see it hit to the p m s for China. In your view, where do you see the most value in that market? Okay, So, I think Lady, one thing which we've got to see which China, is this relaxation of done with zero COVID policy they're following. The hope is that after after the Congress meeting in October UM things kind of ease out.
And we've seen with the new strains of the virus, these are more contagious but less fatal um so I think the authorities know that. So so they're also opening up fairly quickly. So as they relax on this zero COVID, as they do a bit of an easy we should see some bit of an economic recovery come through. Um, the Internet platforms are very very attractive. See longer term we've got issues on growth rates China is going to achieve.
But near term, I think with a strong pent up demand coming through once the reopening happens, um these names can have a decent upside Alright, So take you like, what about the property space. We've stayed away from property space. I think I think clearly there are some trading opportunities here and there, but the overall builds are going to settle at a much lower number UM. So that's that's
a very tactical space. And I think clearly, with the aging population and all those things, that would not be a structural story. If you've got to play the value part in China, you'd rather do the internet platforms. So we're talking about some of your calls, and you said, despite cheap valuations, underweight China, but you are overweight India. Why it's a story we've liked for the last couple of years, and I think the story is clearly coming of it. What we've seen being done by the government
is bearing food. Now, whatever governments done on goods and service taxes resulting in higher tax collections. The PLI scheme to attract investments is working out and it's a fresh economic cycle. So so despite all the noise we've seen in the world, the growth continues to surprise positively. Um though the markets kind of a done well in recent times if you see from the COVID lows. In fact, India's outperform other e M significantly. But this is a
market to buy on depths. Any any correction which comes because of energy shocks, we'd be looking to increase. Are in the exposure. A lot of their recovery and action is being driven by tourism. But when we start to look at the spike in energy bills, which you point out could derail the fledging recovery, how much a price pressures a concern here. So clearly Indian and Asian are two kind of regions which will get negatively impacted should there be in a spike in energy builts significantly from
hair but to their advantage. What what these two regions are seeing as benefits of a bit of a manufacturing move away from China. Um, it's a fresh economic cycle. Volutions of corrictits. For some of the growth names or internet names which are listed in Asia, these names are down seventy percent from heist we saw in the tech bubble two thousand's most good companies kind of a bottom
that down from high. So so for any investors who's got a three four year timeframe, UM, they're good knee stories in ours and and one market particularly we like in our Zender's Vietnam. I think it's an underrated market because it's not part of the ms UM, it's not that discovered. But look at what you get is great companies, good rose, good business models, at early stage of their growth and at a fraction of valuations of India. So so I think that's a market one as to keep
an eye out for. Yeah, that economy is powering along us. There are a few weeks ago and first time in a few years it is completely changing country Vietnam. You're also looking at some of the e V battery names as well. Tell us, I guess the thought here of not only I guess investing in the future, but just the fact that we are seeing such a strong demand for some of these companies. So I think clearly that's where Korea becomes of interest to us. So so it's
a non consensus kind of UM overweight reasonable exposure. Large exposure for US we like in Korea is some of the Korean automakers who are also the top three companies in EVS largely Evan diamotors and in a group et cetera in Europe and US, and then um, there is the current EVY battery makers. So what we're going to see is a lot of the Korean EVY battery makers make in roads into US at the cost of the
Chinese payers, and I think that's the opportunity. So if you look at the scale up for the leading ev batterymakers in Korea, it is five to six six their current revenues in the coming decade, So I think that's a significant growth opportunity. How much is a concern about awakening currencies in Asia sort of giving the thought that you could see what happened in ninety seven, I mean, we're saying these calls that you could see the yen towards one forty, and then we've got the PBOC really
trying to stem the decline in its currency. So I think one has to keep that at the back of the point. Um that that kind of a ties into what we were discussing on a separate note earlier the geopolitical conflict and the fatter tail risks in today's world. So I think that's where it comes through in currencies.
With all being so strong, with the US rates being at three three to three and a half percent, and UM e c B looking to do a eek of control bj BJ looking to do eek of control U currencies are going to be fairly volatile, and that's something one has to keep in mind. The hope here is that the policymakers have learned from the mistakes of the past, so should there be event like freezing of credit markets,
they're going to step in very quickly. Not a great year so far for Asian stocks, only two months that we're in the black and basically the gains that we saw in July being wiped out by the losses in August. Where do we go for the last four months of the year. I think four months are going to be fairly ranged bound, but this gives you an opportunity to
build a portfolio for next three years. UM. The view is that we'll see some signs of slowdown in the US in the next six to eight months, and that's where monetary policy turns neutral and and look, the hope is that fits speak does most of the work rather than the actual actions, et cetera. And what what we have is valuations as a friend. Valuations as a friend.
It's a um underground kind of a space. So anybody who's got a three year time frame, I think next six months would give great opportunities to accumulate in the market. As they say, not timing. Thank you so much for health chat to Chief investment Officer Mary Asset Global Investments, joining us in our Hong Kong studio here on Bloomberg Dead Raccasion