Let's get to Viksh Purshad, our guest for the half hour. Vikas his portfolio manager at MMG Investments, joining us from Singapore. Vicas, thanks for being with us. Can we start with a look at the non oil exports that we had for Singapore in the month of June. Whether you look at it month on month or year on year, these numbers are pretty robust. Hello, good evening, good morning. Tell your
listeners they are pretty robust. I think given our focus on the long term and also given the challenges that we see around the world today, we're not making too much of these month to month prints. In contrast, or as an extension, if you look at month on month or year on your housing data in China, for example, I think if you focus two months on the monthly numbers, they can lead you astray. There are broader problems that
we're still contending with. And um, it's one data point, but there's a lot of data points that are not robust these days. What are the biggest points and you're worried about that we're contending with. I think so if we look across the region and around the road, there is the issue of consumption at the consumer level, the price,
the pressure on volumes. There's some excitement across sectors focused on the on the consumer f MS, f C, f m c G, entertainment, some derivatives of housing, where people are focused on price increases that companies are talking about. I think given the inflationary pressures that we are seeing UH and the willingness of consumers to pull back, I'm
not yet sure that these price hikes will stick. Whether we're talking about consumer goods in Japan or in housing derivative companies in the US, I think it's still too early to say that. So that is that is one concern. The reading that we had in the Friday session here in the US from the University of Michigan and on inflation expectations showed moderation in the month of July. And we've had a few guests on the program talking or suspecting that we may be near peak inflation. And if
that is true, maybe we're also at peak dollar. Would you go that far? Not yet, I think first, on the point of inflation, there's a definitional issue. If you look at the basket of goods that that governments and agencies track, Yes, we could given the expected moderation in energy prices, in fuel prices on that print, on that metric, yes,
we could see some moderation. But if you think longer term the cost of what really really matters to people in the long term, to consumers, housing, healthcare, education, long term energy costs, these are the trends in price prices for these are not yet abating. I think that is a long, long term problem and a bigger problem. We're talking about whether or not the FED is going to be incredibly aggressive. It's next rate meeting as well, and when if they are, that then starts to taper out
as well. When do you then start to see the FED potentially look to either holding or cutting rights. What's your view as we look at these recessionary fears, well, sincially have the There's two parts of that question. Number one is on the interest rate and the tools at the um disposal of bankers um. And then the again the definition of recession. I think, on various definitions, the base cases that we are heading to a recession in the US. The question is of duration and of magnitude.
On the interest rates. That is a key tool in halting the progress of inflation, and we do expect that will continue. Now, the definition again of aggressive, I think will vary depend on when you're speaking with So we're talking about some of the concerns still here with the China picture, when you've got these rising COVID cases, lockdowns in the deepening property sector. Was I was mentioning that the Central Bank governor has said that there will be
more support from the PBOC. But do you agree with the likes of Goldman sets that maybe the economy momentum is not going to be sustainable if we continue to see this COVID zero path. Really, I think relative to the expectations being set earlier in the year of the five and a half percent roughly growth, right now, it's hard to see how that will be meant. I've seen some of the recent numbers. The cuts have started to
come through. I think they will continue. The question is how much of this is already reflected in in asset prices and equity prices, which is where we focus. I think to a great extent it is. But so anybody who's been paying attention to Bloomberg and what you all have that saying it should be fully caught up on a situation from from our side, what I can say is that our focus on this sector broadly defined financials and property companies in in China is measured not in
months or quarters of years. It's it's in decades. So we follow this space closely. Despite the recent turbulence, which typically we like to take advantage of, despite the recent sell offs, again which we typically like to take advantage of, we have allocated little to no capital in this period. We're still white waiting and seeing. We don't see our opportunities here, yet we see them elsewhere. So describe more clearly for me what you do see that prevents you
from kind of staking out of position. Part of it is is relative opportunities. So we we don't invest just in one market. We invest across the region and around the world. And when you look at housing in particular, it's a it's a source of adjecat for for many
participants and market participants as well around the world. And if you look at the trends that we are seeing, the underlying trends that we're seeing in the ripple effects through financials and housing derivatives in China, and you contrast that with the market like India where penetration is low the banks are healthy, better capitalized than they have been in many years. Credit growth is pretty healthy. As an offshoot of that, or related to that, the housing sector
and housing direvtors, we see opportunities there. Uh. We see opportunities, long term investment opportunities with high perspective returns in other parts of Asia as well and within China. Yes, the property sector is very important, but we have a significant allocation of time and capital and resources and people to China, and we are actively pursuing investment opportunities there across other sectors. And you may gine you're looking as well across other
parts of Asia. Tell us what you like in India. Yes, So we've spoken a few times in the past couple of years. In one area that we have yet covered is the Indian bank sector, and we just touched upon that very briefly. But I think if you look at the underperformance and you couple that with the strong fundamentals that we see, and also you overlay on top of that the commentary from from the executives, it seems like on a multi year investment horizon, this is a pretty
good area to be allocating capital. It's a big sector, it's a big waiting within the benchmarks, but I think there's still scope for being overweighted that and it's it's worth international investors paying attention to it as well. Because a few of these banks do have a d r S, you can access them. You don't have to be investing only in Indian companies. As offshoots of that, there's a
housing finance companies. As off shoots of that, there are companies that provide um fixings and furniture and typing, small caps, midcaps, large ups alike that we think are pretty compelling investment opportunities that you will see high to perhaps even expanding returns on capital for the next X number of years,
and that's pretty exciting to us. To what extent is your thesis, whether it's for China or India, kind of predicated on the idea that we're going to get a little bit more from the government in terms of stimulus, Not very much. I think it's it's very country specific
and different companies are employing or deploying different tools. If we start in the West and then move east, if we start with India, I think this is largely a question of gross under penetration of the housing market, and perhaps next time we can talk a little bit about the auto sector in Indian why we like autos and auto pervatives as well. But gross under penetration housing is
still affordable. If you if I can just make a comment, if you look very yeah, so the price of stability, staying within the middle class and progressing is still pretty fair, and it is allowing for more spending there. And so weirdly we're out of town, we might pick it up on TV. You're joining me later because Bochard is from MG Investments and this is Bloomberg