Good morning, and welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Prisner. Here are the stories we're following today. Joining us now is Helen ju As. She is the chief investment Officer also a managing director at NF Trinity. Helen joins us from our studios in Hong Kong. It's always a pleasure to have the chance to visit with you. Helen. Talk to me a little bit about the way in which you understand these stimulus measures that have been unleashed by the Chinese government and how they may have a significant impact on growth. I mean, the market seems to be debating the efficacy here. I mean there may have been a little bit of enthusiasm initially, but as time went on, the equity markets seemed to say, hmm, we're a little skeptical. Are you skeptical?

Good morning, and welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Prisner. Here are the stories we're following today. Joining us now is Helen ju As. She is the chief investment Officer also a managing director at NF Trinity. Helen joins us from our studios in Hong Kong. It's always a pleasure to have the chance to visit with you. Helen. Talk to me a little bit about the way in which you understand these stimulus measures that have been unleashed by the Chinese government and how they may have a significant impact on growth. I mean, the market seems to be debating the efficacy here. I mean there may have been a little bit of enthusiasm initially, but as time went on, the equity markets seemed to say, hmm, we're a little skeptical. Are you skeptical?

Look, I think the market's been very skeptical for quite a long time, and justifiably so. Right so, most of the last year and a half it's been about deflation and market drating and just generally speaking, vicious feedback loops every where because of the weaker property market. As a result of the policy tightening, property prices went down, so wealth effect when negative consumption started to suffer, and you know, as a result, that kind of all fed itself and equity markets reacted accordingly. I think what the policy makers are trying to do in this particular case is, rather than have piecemeal little bits of policies here and there, to actually, you know, take a whatever it takes type of approach for once. And this has been a big bazooka in terms of policy package. You have not just you know, rate cuts and so on, but also fiscal you have property policies.

Look, I think the market's been very skeptical for quite a long time, and justifiably so. Right so, most of the last year and a half it's been about deflation and market drating and just generally speaking, vicious feedback loops every where because of the weaker property market. As a result of the policy tightening, property prices went down, so wealth effect when negative consumption started to suffer, and you know, as a result, that kind of all fed itself and equity markets reacted accordingly. I think what the policy makers are trying to do in this particular case is, rather than have piecemeal little bits of policies here and there, to actually, you know, take a whatever it takes type of approach for once. And this has been a big bazooka in terms of policy package. You have not just you know, rate cuts and so on, but also fiscal you have property policies.

You also have a.

You also have a.

Coin corresponding capital market stimulus where they basically have put a floor to the overall domestic a share market. Obviously, it's going to take time for things to reverse and to inflect into hopefully virtus feedback loops. That's probably going to take easily three to six months. So the market got initially very excited and kind of went vertical. I don't think the policy makers want that either, because that's a little bit too extreme, and so I think a little bit of a retlacement is good. But I think the next leg is going to be dependent on whether the policy impact starts to show through, and I think that will gradually start to happen.

Coin corresponding capital market stimulus where they basically have put a floor to the overall domestic a share market. Obviously, it's going to take time for things to reverse and to inflect into hopefully virtus feedback loops. That's probably going to take easily three to six months. So the market got initially very excited and kind of went vertical. I don't think the policy makers want that either, because that's a little bit too extreme, and so I think a little bit of a retlacement is good. But I think the next leg is going to be dependent on whether the policy impact starts to show through, and I think that will gradually start to happen.

So what's the house view at and F trinity. Do you think this is an opportunity or are you holding back and maybe adopting kind of a wait and see approach.

So what's the house view at and F trinity. Do you think this is an opportunity or are you holding back and maybe adopting kind of a wait and see approach.

I think you have to kind of move ahead of the market. You know, waiting and seeing doesn't really help these days because markets respond so quickly, right So if you do have really positive data, you could see the ashare market, you know, practically limit up day after day. So I'm not saying that's going to happen right away, but we do think that after the retlacement, it's probably a decent level to get into the domestic ashare market, even some Hong Kong China stocks as well. We think the risk reward is better than a lot of other markets that have already performed very well, where expectations are very high, and you know, valuation and positioning is quite stretched as well. So relative to before, I think China is definitely a decent risk reward at this point.

I think you have to kind of move ahead of the market. You know, waiting and seeing doesn't really help these days because markets respond so quickly, right So if you do have really positive data, you could see the ashare market, you know, practically limit up day after day. So I'm not saying that's going to happen right away, but we do think that after the retlacement, it's probably a decent level to get into the domestic ashare market, even some Hong Kong China stocks as well. We think the risk reward is better than a lot of other markets that have already performed very well, where expectations are very high, and you know, valuation and positioning is quite stretched as well. So relative to before, I think China is definitely a decent risk reward at this point.

So are you focused primarily on equities when you're talking about side here? I'm wondering whether or not there are opportunities in credit is At the same time.

So are you focused primarily on equities when you're talking about side here? I'm wondering whether or not there are opportunities in credit is At the same time.

I think It's difficult, right, because basically, if you look at the China tenure, we're looking at two point one percent, which is very very low by global standard and by historical standard. And the PBOC has made it very clear that they think that the ten year is too low and that there should be a proper ye curve in China. That's a lot steper, and I think there's going to be a lot more mof bond issues coming up, so more supply. So I actually am fairly negative on China CGB. I think that there's going to be an upward move in terms of the CGB yield over the next six to twelve months if data starts to improve. And on the credit side, as you know, there aren't so many credits that foreign investors like to look at because of more kind of immature rating systems and so on and so forth. So most of the activity, at least for foreign investors has been on CGB and on policy banks rather than the domestic credit market.

I think It's difficult, right, because basically, if you look at the China tenure, we're looking at two point one percent, which is very very low by global standard and by historical standard. And the PBOC has made it very clear that they think that the ten year is too low and that there should be a proper ye curve in China. That's a lot steper, and I think there's going to be a lot more mof bond issues coming up, so more supply. So I actually am fairly negative on China CGB. I think that there's going to be an upward move in terms of the CGB yield over the next six to twelve months if data starts to improve. And on the credit side, as you know, there aren't so many credits that foreign investors like to look at because of more kind of immature rating systems and so on and so forth. So most of the activity, at least for foreign investors has been on CGB and on policy banks rather than the domestic credit market.

Is there anything that you've identified thematically that you expect will outperform kind of conventional wisdom here industries or segments of the economy in which to invest.

Is there anything that you've identified thematically that you expect will outperform kind of conventional wisdom here industries or segments of the economy in which to invest.

Well, I think if the push towards stabilizing the property market and property prices is effective. I think the most evident and media beneficiary is probably property, but there are not that many investable names remaining. I don't think so much the property supply chain because I think the policy makers care more about price stability rather than huge volume recovery. And I think it's going to be more secondhand market activity rather than firsthand, so it's not going to lift the demand for construction materials necessarily. But if property prices can stabilize, the biggest beneficiary is going to be consumption and so consumer stocks have debrated hugely since the beginning of this year, and internet stocks are trading at very reasonable valuations as well. I think if they can go from negative growth to stable to maybe slightly positive growth, I think the evaluation multiple can move up quite a bit. So consumption and internet I think would be two very interesting areas to watch for the coming period. Another area would probably be industrials and cyclicals. You know, if manufacturing and other areas start to show some inflection as well. Relatively speaking, if you look at defensives or central SOE yield needs that have already performed very well, in the last couple of years, those are probably likely to be more funding sources.

Well, I think if the push towards stabilizing the property market and property prices is effective. I think the most evident and media beneficiary is probably property, but there are not that many investable names remaining. I don't think so much the property supply chain because I think the policy makers care more about price stability rather than huge volume recovery. And I think it's going to be more secondhand market activity rather than firsthand, so it's not going to lift the demand for construction materials necessarily. But if property prices can stabilize, the biggest beneficiary is going to be consumption and so consumer stocks have debrated hugely since the beginning of this year, and internet stocks are trading at very reasonable valuations as well. I think if they can go from negative growth to stable to maybe slightly positive growth, I think the evaluation multiple can move up quite a bit. So consumption and internet I think would be two very interesting areas to watch for the coming period. Another area would probably be industrials and cyclicals. You know, if manufacturing and other areas start to show some inflection as well. Relatively speaking, if you look at defensives or central SOE yield needs that have already performed very well, in the last couple of years, those are probably likely to be more funding sources.

So when you look at the States, two things come to mind for me. One is what's going on with the FED and interest rate policy. Secondarily is the US presidential election. Let's talk about the FED first. In your expectations for many more rate cuts, we had a very strong reading on retail sales here in the US, and maybe it was another one of those data points where the market struggled to rate price FED easing this year. Are you comfortable with two more twenty five basis point rate cuts? Does that fit into your thinking?

So when you look at the States, two things come to mind for me. One is what's going on with the FED and interest rate policy. Secondarily is the US presidential election. Let's talk about the FED first. In your expectations for many more rate cuts, we had a very strong reading on retail sales here in the US, and maybe it was another one of those data points where the market struggled to rate price FED easing this year. Are you comfortable with two more twenty five basis point rate cuts? Does that fit into your thinking?

Yeah?

Yeah?

Look, you know, look, the overall volatility in terms of rates has been still pretty crazy this year, right, Expectations has been shifting all over the map because of the volatility and the fundamental data. But certainly over the last couple of months, aside from that very bad NFP print in the beginning of October and in the beginning of September, all the other data has been much stronger, and obviously the latest employment numbers were blowout positive. So I would say the likelihood of a fifty basis point further cut in November is pretty much close to zero now, so two twenty five basis point cuts remaining I think makes sense. But going into next year, whether there's actually going to be four more cuts as the market currently prices, I think it's going to be still data dependent. At this point, it looks like, you know, perhaps not, but I think we're definitely closer to the base case versus where we have been earlier this year, when the market was shifting from anywhere between like one hundred and sixty basis points of cuts this year to like only thirty basis points of cuts this year. So now we're kind of somewhere in between, in a more reasonable range, I would say.

Look, you know, look, the overall volatility in terms of rates has been still pretty crazy this year, right, Expectations has been shifting all over the map because of the volatility and the fundamental data. But certainly over the last couple of months, aside from that very bad NFP print in the beginning of October and in the beginning of September, all the other data has been much stronger, and obviously the latest employment numbers were blowout positive. So I would say the likelihood of a fifty basis point further cut in November is pretty much close to zero now, so two twenty five basis point cuts remaining I think makes sense. But going into next year, whether there's actually going to be four more cuts as the market currently prices, I think it's going to be still data dependent. At this point, it looks like, you know, perhaps not, but I think we're definitely closer to the base case versus where we have been earlier this year, when the market was shifting from anywhere between like one hundred and sixty basis points of cuts this year to like only thirty basis points of cuts this year. So now we're kind of somewhere in between, in a more reasonable range, I would say.

So when you listen to the rhetoric from each of the two campaigns in the US, the candidates running for president, is it cause you to kind of think about what the future may hold in terms of US policy, whether it's on trade visa VI tariffs, or whether it's something that may produce a little bit more inflation in the United States. How are you thinking about the US election when it comes to your investment strategy.

So when you listen to the rhetoric from each of the two campaigns in the US, the candidates running for president, is it cause you to kind of think about what the future may hold in terms of US policy, whether it's on trade visa VI tariffs, or whether it's something that may produce a little bit more inflation in the United States. How are you thinking about the US election when it comes to your investment strategy.

Well, certainly people think that if Trump wins, that is going to be more proactive for US fiscal policy and US domestic growth, but at the same time it's going to bring a lot of uncertainties and tail risk to non US markets, especially in emerging markets China, etc. If Harris wins, then probably the dollar will sell off, the yield will come down a little bit. There's going to be more fiscal austerity, but also a lot less potential risks in terms of trade and huge deviations from the Biden administration stands on a lot of these other countries. Right, So I would say the Harris scenario would be more positive for non US markets, and the Trump scenario will probably be able to extend the US market rally a little bit more and relatively strengthen the dollar, which then comparatively speaking hurts performance of other markets. But that said, I think that Trump win has been more or less the market's default assumption for quite some time, So even if it happens, I don't see that the market's going to have a huge move. But if let's say Democrats, you know, win the White House and maybe you know, one of the you know, basically take over part of Congress as well, then I think, you know, there is more of a retlacement potential for the market, because that's not the default assumption we've had over the past few months.

Well, certainly people think that if Trump wins, that is going to be more proactive for US fiscal policy and US domestic growth, but at the same time it's going to bring a lot of uncertainties and tail risk to non US markets, especially in emerging markets China, etc. If Harris wins, then probably the dollar will sell off, the yield will come down a little bit. There's going to be more fiscal austerity, but also a lot less potential risks in terms of trade and huge deviations from the Biden administration stands on a lot of these other countries. Right, So I would say the Harris scenario would be more positive for non US markets, and the Trump scenario will probably be able to extend the US market rally a little bit more and relatively strengthen the dollar, which then comparatively speaking hurts performance of other markets. But that said, I think that Trump win has been more or less the market's default assumption for quite some time, So even if it happens, I don't see that the market's going to have a huge move. But if let's say Democrats, you know, win the White House and maybe you know, one of the you know, basically take over part of Congress as well, then I think, you know, there is more of a retlacement potential for the market, because that's not the default assumption we've had over the past few months.

Hard to believe that we're about three weeks out from that event. I know and was there.

Hard to believe that we're about three weeks out from that event. I know and was there.

Okay, time has flown by.

Okay, time has flown by.

It really has, Helen. It's always a pleasure. Thanks so much, Helen Ju, Chief Investment Officer, also Managing director at NF Trinity. Joining us now is pay Chian lu Asia, economist at Fidelity International US from the Lion City of Singapore. Peychen, thank you for making time to chat with us. Can we talk about the way in which you understand the policy rollout that authorities in China have been kind of rolling out in various stages and targeting various aspects of the economy. First, what do we know about how policy is targeting the property market, which I think we can agree is the primary trouble spot.

It really has, Helen. It's always a pleasure. Thanks so much, Helen Ju, Chief Investment Officer, also Managing director at NF Trinity. Joining us now is pay Chian lu Asia, economist at Fidelity International US from the Lion City of Singapore. Peychen, thank you for making time to chat with us. Can we talk about the way in which you understand the policy rollout that authorities in China have been kind of rolling out in various stages and targeting various aspects of the economy. First, what do we know about how policy is targeting the property market, which I think we can agree is the primary trouble spot.

Thanks for having me today, Dog, I think before we dive deeper into the property sector specifically, I would love to take a step back to think about why you have such set of policy right now and how this policy is rolled out. I think potentially the policy trigger was probably multifolds. Over the summer, we have experienced a lot more troubled headlines about fiscal conditions in China as well as the unemployment issue, not mentioning the property sector that mentioned has always been on top of investor's mind and is running on a weaker momentum. So putting all this together, I think the economy does need an additional set of policy boosts to stabilize, and that's why we had such a great concerted effort from the policy maker to stabilize the growth momentum. And more specifically in terms of how the policy has been delivered in the property sector, I think that all goes back to the political pivot where they mentioned about stopping the decline of the sector and stabilize it. So following through with that, we have seen a lot more policy coming out from both supply and demand side. On the supply side, they're basically trying to reduce supplies by stopping new construction and digest excessive inventories. And on the demand side, definitely more relaxation of the previous restrictive policies to stimulate domestic demand.

Thanks for having me today, Dog, I think before we dive deeper into the property sector specifically, I would love to take a step back to think about why you have such set of policy right now and how this policy is rolled out. I think potentially the policy trigger was probably multifolds. Over the summer, we have experienced a lot more troubled headlines about fiscal conditions in China as well as the unemployment issue, not mentioning the property sector that mentioned has always been on top of investor's mind and is running on a weaker momentum. So putting all this together, I think the economy does need an additional set of policy boosts to stabilize, and that's why we had such a great concerted effort from the policy maker to stabilize the growth momentum. And more specifically in terms of how the policy has been delivered in the property sector, I think that all goes back to the political pivot where they mentioned about stopping the decline of the sector and stabilize it. So following through with that, we have seen a lot more policy coming out from both supply and demand side. On the supply side, they're basically trying to reduce supplies by stopping new construction and digest excessive inventories. And on the demand side, definitely more relaxation of the previous restrictive policies to stimulate domestic demand.

So what is your sense in terms of the time that it's going to take. And I know some of them have not even been rolled out yet. I mean, but do you have a sense of how long it will take for these policies to have a significant impact.

So what is your sense in terms of the time that it's going to take. And I know some of them have not even been rolled out yet. I mean, but do you have a sense of how long it will take for these policies to have a significant impact.

Well, I think it largely depends on where we are looking at in terms of policy aultimate goals. In terms of stabilization, I wouldn't think we need so long to stabilize the growth momentum, especially on the real activity side. So some of the policy that's been delivered on the margins, such as equipment upgrading, trading of home appliances, as well as additional investments. All these set of policies are set to stabilize the real activity growth momentum in a fairly quickly manner. So in Q one Q two twenty twenty five, I would think that we will be able to see some marginal sequential improvement in real activity sector, but the structural issues are more long term. I think it's probably going to take a longer time horizon to resolve significantly. But that being said, I think we're still waiting for more details to assess the actual impact and scale of these policies.

Well, I think it largely depends on where we are looking at in terms of policy aultimate goals. In terms of stabilization, I wouldn't think we need so long to stabilize the growth momentum, especially on the real activity side. So some of the policy that's been delivered on the margins, such as equipment upgrading, trading of home appliances, as well as additional investments. All these set of policies are set to stabilize the real activity growth momentum in a fairly quickly manner. So in Q one Q two twenty twenty five, I would think that we will be able to see some marginal sequential improvement in real activity sector, but the structural issues are more long term. I think it's probably going to take a longer time horizon to resolve significantly. But that being said, I think we're still waiting for more details to assess the actual impact and scale of these policies.

But if one of the problems has been this lack of confidence sentiment has been so weak, is it the property market that's going to turn that around? Is it equity prices being at higher levels that will will necessarily improve sentiment and the outlook for the future.

But if one of the problems has been this lack of confidence sentiment has been so weak, is it the property market that's going to turn that around? Is it equity prices being at higher levels that will will necessarily improve sentiment and the outlook for the future.

I think it's hard to pinpoint a specific trigger that will turn around economic confidence or in a sudden There's no magic bullet over here, given that on a downside downward shift of the economy, many factors played out unfavorably earlier during the post pandemic recovery. So looking forward, I think we probably need to see quite a few things stabilizing or recovering before we see a much more significant improvement in the confidence of the economy general. So from a sector or a big picture wise, we probably need to see physical conditions to improve so that the local government have more ammunition to spend. Private sector enterprises need to see more favorable or favorable policies in order to be more comfortable in expanding their carepax and investments, and a consumer sector, perhaps a combination of household income improvement as well as the wealth impact from property sector being stabilizing, are both very helpful for us to see the confidence coming back to the economy.

I think it's hard to pinpoint a specific trigger that will turn around economic confidence or in a sudden There's no magic bullet over here, given that on a downside downward shift of the economy, many factors played out unfavorably earlier during the post pandemic recovery. So looking forward, I think we probably need to see quite a few things stabilizing or recovering before we see a much more significant improvement in the confidence of the economy general. So from a sector or a big picture wise, we probably need to see physical conditions to improve so that the local government have more ammunition to spend. Private sector enterprises need to see more favorable or favorable policies in order to be more comfortable in expanding their carepax and investments, and a consumer sector, perhaps a combination of household income improvement as well as the wealth impact from property sector being stabilizing, are both very helpful for us to see the confidence coming back to the economy.

Where does that leave China in trying to reach that growth target?

Where does that leave China in trying to reach that growth target?

Then, I think with the coordinated policy efforts, China might be closer to five percent grows for twenty twenty four, and looking beyond twenty twenty four, I think in twenty twenty five the next few quarters, stabilization is still going to be the key momentum key saying that we're looking at far rather than a very strong reflation. So in terms of growth momentum, we still expect China to focus a lot more on the quality of growth, whereas stabilizing its growth momentum somewhere between four point five to five percent to allow it to gradually settle in a slower range.

Then, I think with the coordinated policy efforts, China might be closer to five percent grows for twenty twenty four, and looking beyond twenty twenty four, I think in twenty twenty five the next few quarters, stabilization is still going to be the key momentum key saying that we're looking at far rather than a very strong reflation. So in terms of growth momentum, we still expect China to focus a lot more on the quality of growth, whereas stabilizing its growth momentum somewhere between four point five to five percent to allow it to gradually settle in a slower range.

Is there anything that you can see that might put a dent into one of the bright spots of the Chinese economy, which is the exports the manufacturing of certain goods that have been in many respects targeting the European market, the American market. Is there anything that you can see that may disrupt that positivity?

Is there anything that you can see that might put a dent into one of the bright spots of the Chinese economy, which is the exports the manufacturing of certain goods that have been in many respects targeting the European market, the American market. Is there anything that you can see that may disrupt that positivity?

Well, I think from a medium term perspective, China has been upgrading supply chain significantly over the past few decades, So from that perspective, I don't really see much of a structural challenge of China's expot composition going forward. But that being said cyclically, expots given is more excellent demand driven in nature, slow down in the US economy, the European economy, and to some extent, US and Asian blocks will all affect China's ex performances. Given that we all see that the US economy has been slowing gradually, even though soft lending remains our base case, but we still think sequential slow down it's going to weigh on the performance of China's sector going forward.

Well, I think from a medium term perspective, China has been upgrading supply chain significantly over the past few decades, So from that perspective, I don't really see much of a structural challenge of China's expot composition going forward. But that being said cyclically, expots given is more excellent demand driven in nature, slow down in the US economy, the European economy, and to some extent, US and Asian blocks will all affect China's ex performances. Given that we all see that the US economy has been slowing gradually, even though soft lending remains our base case, but we still think sequential slow down it's going to weigh on the performance of China's sector going forward.

I'm going to answer my own question, and I think the issue of tariffs might be one of the stumbling blocks for the export economy in China. Would you agree with that?

I'm going to answer my own question, and I think the issue of tariffs might be one of the stumbling blocks for the export economy in China. Would you agree with that?

Well, I think that largely depends on how the teriffs are implemented and what kind of scale we're looking at, So that's all uncertain at this stage. But if we think about the generally protective stunts, that's definitely going to hurt China's expot performance, especially around the time of implementitious but zoom me out to a longer term horizon, that's just going to continue to push China to upgrade itself in a global supply chain diversification in term of a supply chain, so that leads China more integrated with the rest of the world.

Well, I think that largely depends on how the teriffs are implemented and what kind of scale we're looking at, So that's all uncertain at this stage. But if we think about the generally protective stunts, that's definitely going to hurt China's expot performance, especially around the time of implementitious but zoom me out to a longer term horizon, that's just going to continue to push China to upgrade itself in a global supply chain diversification in term of a supply chain, so that leads China more integrated with the rest of the world.

Paychen, thank you so much for making time to chat with us. I enjoyed the conversation. Paychen Lu Asia economist at Fidelity International. Joining us on the Daybreak Asia podcast. Joining us now is George Marris. He is the chief investment officer also the global head of Equities at Principal Asset Management. George joining us from our studios in Hong Kong. Can we start by looking at the story in China? We've had this enormous flood of stimulus that the market has tried to understand. Some of this we know will be delayed. The equity market seemed at one point to be strongly convinced it was going to matter. But I think if you look at equity trading now, George, we're down roughly ten percent from the high that we put in in early October. So maybe the investment community has become a little disinhearted or at least skeptical. Is that the way you read it?

Paychen, thank you so much for making time to chat with us. I enjoyed the conversation. Paychen Lu Asia economist at Fidelity International. Joining us on the Daybreak Asia podcast. Joining us now is George Marris. He is the chief investment officer also the global head of Equities at Principal Asset Management. George joining us from our studios in Hong Kong. Can we start by looking at the story in China? We've had this enormous flood of stimulus that the market has tried to understand. Some of this we know will be delayed. The equity market seemed at one point to be strongly convinced it was going to matter. But I think if you look at equity trading now, George, we're down roughly ten percent from the high that we put in in early October. So maybe the investment community has become a little disinhearted or at least skeptical. Is that the way you read it?

For sure? I think the reaction after kind of the initial surprise has been one of continued retrenchment. And what's been interesting is, irrespective of the policy, when it comes at first comes out there's enthusiasm, and then it seems like this chorus that says that's not enough, it's not enough, and that's certainly impacted markets negatively.

For sure? I think the reaction after kind of the initial surprise has been one of continued retrenchment. And what's been interesting is, irrespective of the policy, when it comes at first comes out there's enthusiasm, and then it seems like this chorus that says that's not enough, it's not enough, and that's certainly impacted markets negatively.

One of the things that I'm wondering about is the extent to which sentiment can be turned on a dime. This seems to be a challenge that's going to require years to kind of correct. Is that a fair statement.

One of the things that I'm wondering about is the extent to which sentiment can be turned on a dime. This seems to be a challenge that's going to require years to kind of correct. Is that a fair statement.

In many ways? For sure, because we've had such negativity coming emanating from China. We all understand the structural issues that it confronts. We understand the political tensions, and we also understand that for the last five plus years, the rule of law with respect to treating shareholder capital and foreign capital has been a little bit opaque, and we need to get past that. And so I think there's a notion of the government has to show you willingness further commitment to doing things, so you've got to just climb this wall of skepticism that's out there. So you'll need to see continued actions out of there to finally get the markets to break free.

In many ways? For sure, because we've had such negativity coming emanating from China. We all understand the structural issues that it confronts. We understand the political tensions, and we also understand that for the last five plus years, the rule of law with respect to treating shareholder capital and foreign capital has been a little bit opaque, and we need to get past that. And so I think there's a notion of the government has to show you willingness further commitment to doing things, so you've got to just climb this wall of skepticism that's out there. So you'll need to see continued actions out of there to finally get the markets to break free.

What about the latest measures to address the problems in the property market. Yesterday we had news that China will nearly double its loan quota to so called white list property projects. Is this going to have an impact you think.

What about the latest measures to address the problems in the property market. Yesterday we had news that China will nearly double its loan quota to so called white list property projects. Is this going to have an impact you think.

I don't know whether or not this particular policy is the policy that breaks or that sets the structure up with respect to real estate. We all understand that from a structural perspective, Chinese property is a huge problem, has been for a long period of time. It needs to get settled. What I would actually say is, I think what's more, what's more intriguing is the fact that we've seen multiple measures over the past year, and certainly over the past month to address the real estate market in a much more systematic and truly structural way than we've seen in the past. I think this just latest, this latest you know, measure with respect to white property white list property is a further example of the government's commitment to making this right. And I think it's that, frankly, that compounding of all these different policies that's more important than just the last policy in and of itself.

I don't know whether or not this particular policy is the policy that breaks or that sets the structure up with respect to real estate. We all understand that from a structural perspective, Chinese property is a huge problem, has been for a long period of time. It needs to get settled. What I would actually say is, I think what's more, what's more intriguing is the fact that we've seen multiple measures over the past year, and certainly over the past month to address the real estate market in a much more systematic and truly structural way than we've seen in the past. I think this just latest, this latest you know, measure with respect to white property white list property is a further example of the government's commitment to making this right. And I think it's that, frankly, that compounding of all these different policies that's more important than just the last policy in and of itself.

The property market problem is just one aspect of this deflationary trap to China is caught in when you study periods of severe deflation, and I'm thinking of Japan, and I don't know whether the analog is apt or not. I mean, is it extremely difficult to break from the grip of something like this.

The property market problem is just one aspect of this deflationary trap to China is caught in when you study periods of severe deflation, and I'm thinking of Japan, and I don't know whether the analog is apt or not. I mean, is it extremely difficult to break from the grip of something like this.

I think Japan is a fantastic analog with respect to understanding that some of the issues confronting China. You've got the disinflation in the markets, if not outright deflation. You have a demographic situation that is going into population decline. That's also a confounding element in how Japan. You know, essentially Japan had gone through roughly thirty years of economic malaise before the last couple of years we've seen that turnaround. I think if I were a Chinese policymaker, I'd be paying rapt attention to what Japan did over the last couple of years to reignite both markets and their economy. And a lot of that is just structural reform across booth, government and corporate sector.

I think Japan is a fantastic analog with respect to understanding that some of the issues confronting China. You've got the disinflation in the markets, if not outright deflation. You have a demographic situation that is going into population decline. That's also a confounding element in how Japan. You know, essentially Japan had gone through roughly thirty years of economic malaise before the last couple of years we've seen that turnaround. I think if I were a Chinese policymaker, I'd be paying rapt attention to what Japan did over the last couple of years to reignite both markets and their economy. And a lot of that is just structural reform across booth, government and corporate sector.

So let's talk a little bit about japan expectations here that the boj is going to at some point be confronted with having to raise interest rates. Whether it happens before the end of the year or maybe sometime in Q one of twenty twenty five, that's up for debate. But I'm looking at a end that is weakened substantially here in the last couple of days right now at about one point fifty against the greenback. How much pressure does this put on the boj to kind of to do something essential?

So let's talk a little bit about japan expectations here that the boj is going to at some point be confronted with having to raise interest rates. Whether it happens before the end of the year or maybe sometime in Q one of twenty twenty five, that's up for debate. But I'm looking at a end that is weakened substantially here in the last couple of days right now at about one point fifty against the greenback. How much pressure does this put on the boj to kind of to do something essential?

You know, The end is a it's complicated because it cuts both ways. A week end certainly helps exports in Japan's one of the largest exporting economies in the world. That certainly drives their own economy, and so a weekend is a competitive advantage for them obviously relative to relative to peers. On the other side, it is essentially importing inflation because it makes foreign goods much more expensive in Japanese terms, it is a headwind for domestic Japanese consumption, and like China, domestic consumption has to be addressed, right, And I think for a lot of these export dominated economy economies, not just Japan, but China, Germany, having an export driven economy means you're dependent on other countries, particularly the US, to be the engine of global growth and you're really not generating internally. That's a big structural element that has to get fixed. So I think the end continuing a weekend does make you know, a Japanese consumption story harder to attain.

You know, The end is a it's complicated because it cuts both ways. A week end certainly helps exports in Japan's one of the largest exporting economies in the world. That certainly drives their own economy, and so a weekend is a competitive advantage for them obviously relative to relative to peers. On the other side, it is essentially importing inflation because it makes foreign goods much more expensive in Japanese terms, it is a headwind for domestic Japanese consumption, and like China, domestic consumption has to be addressed, right, And I think for a lot of these export dominated economy economies, not just Japan, but China, Germany, having an export driven economy means you're dependent on other countries, particularly the US, to be the engine of global growth and you're really not generating internally. That's a big structural element that has to get fixed. So I think the end continuing a weekend does make you know, a Japanese consumption story harder to attain.

What you mentioned the fact that it actually benefits the exporters. So would you put money to work in some of those names in Japan right now?

What you mentioned the fact that it actually benefits the exporters. So would you put money to work in some of those names in Japan right now?

I don't know that I would make a necessary en trade here, and I think part of the reason is is we know that while central banks around the world are continuing to be an easing posture, whether it's the FED, the Bank of England, the the PBOC, the Bank of Japan is moving in a different direction right The Bank of Japan is in looking to raise rates obviously reverse years of zero to negative interest rates, though they have to get rates higher. So I don't know that I would necessarily play a weakening y in the forward outlook as long but as long as the yen is under control, I think you can look to the actual underlying companies and invest there well.

I don't know that I would make a necessary en trade here, and I think part of the reason is is we know that while central banks around the world are continuing to be an easing posture, whether it's the FED, the Bank of England, the the PBOC, the Bank of Japan is moving in a different direction right The Bank of Japan is in looking to raise rates obviously reverse years of zero to negative interest rates, though they have to get rates higher. So I don't know that I would necessarily play a weakening y in the forward outlook as long but as long as the yen is under control, I think you can look to the actual underlying companies and invest there well.

You mentioned the FED and expectations for more rate cuts. Today in the States, we had a very solid report on retail sales. I don't know whether it's likely to contribute to the FED doing anything different than what the market is expecting right now. Maybe forty basis points in total easing between now and the end of the year, and so you flip a coin and say, Okay, the FED goes twenty five basis points in November and another twenty five basis point rate cut in December. Is that the way that you understand it right now?

You mentioned the FED and expectations for more rate cuts. Today in the States, we had a very solid report on retail sales. I don't know whether it's likely to contribute to the FED doing anything different than what the market is expecting right now. Maybe forty basis points in total easing between now and the end of the year, and so you flip a coin and say, Okay, the FED goes twenty five basis points in November and another twenty five basis point rate cut in December. Is that the way that you understand it right now?

I think that's certainly that's the way I understand it. You have to be adjusting your probabilities. Right So, when the FED cut by fifty basis points and provided the dot plot that indicated another fifty for the rest of this year and another one hundred for twenty twenty five, We've had data that's come in over the last several weeks that have indicated that the US economy is actually performing quite well, and we are seeing some inflationary pressures out there. One of the interesting trends is we're going through this earning season is the degree to which companies are highlighting cost pressures is increasing pretty significantly. So I think their ability to necessarily go the full fifty to the rest of this year, and I think we have to moderate the odds of that and an additional one hundred basis points next year. It feels pretty aggressive.

I think that's certainly that's the way I understand it. You have to be adjusting your probabilities. Right So, when the FED cut by fifty basis points and provided the dot plot that indicated another fifty for the rest of this year and another one hundred for twenty twenty five, We've had data that's come in over the last several weeks that have indicated that the US economy is actually performing quite well, and we are seeing some inflationary pressures out there. One of the interesting trends is we're going through this earning season is the degree to which companies are highlighting cost pressures is increasing pretty significantly. So I think their ability to necessarily go the full fifty to the rest of this year, and I think we have to moderate the odds of that and an additional one hundred basis points next year. It feels pretty aggressive.

One of the things that was interesting today is that gold climb to a fresh record high. Is any of this, in your view, tied to some repositioning ahead of the US election.

One of the things that was interesting today is that gold climb to a fresh record high. Is any of this, in your view, tied to some repositioning ahead of the US election.

Look, it certainly could, right, And gold's a wonderful inflation hedge, and if you think the election is going to produce a result that'll be inflationary, you know, it's a great hedge. I'm not so sure that that's necessarily it. I think that both candidates have policies that will likely be inflationary. So I don't think there's a real change there. We've all known that. I think the issue is, you know, gold is also a stability play, right, and we continue to see geopolitical tension ratchet. The Middle East is you know, in significant turmoil. We still have a you know, a ground incursion in Ukraine. The situation here in Asia continues to be challenging with respect to you know, Chinese actions throughout the China Sea. I think I think this is just a sign that people want safety and stability and feel it's a fantastic hedge given all else that's going on.

Look, it certainly could, right, And gold's a wonderful inflation hedge, and if you think the election is going to produce a result that'll be inflationary, you know, it's a great hedge. I'm not so sure that that's necessarily it. I think that both candidates have policies that will likely be inflationary. So I don't think there's a real change there. We've all known that. I think the issue is, you know, gold is also a stability play, right, and we continue to see geopolitical tension ratchet. The Middle East is you know, in significant turmoil. We still have a you know, a ground incursion in Ukraine. The situation here in Asia continues to be challenging with respect to you know, Chinese actions throughout the China Sea. I think I think this is just a sign that people want safety and stability and feel it's a fantastic hedge given all else that's going on.

George, You're in Hong Kong and I'm sure you're taking a lot of client meetings, and I'm wondering about the questions you're being asked, right now, can you share a little bit of.

George, You're in Hong Kong and I'm sure you're taking a lot of client meetings, and I'm wondering about the questions you're being asked, right now, can you share a little bit of.

That, Doug. There's really two issues that come up in every single meeting. The first one is is this the inflection point for China?

That, Doug. There's really two issues that come up in every single meeting. The first one is is this the inflection point for China?

Right?

Right?

Obviously, people here are very concerned about the Chinese economic health and want to know whether or not this is going to break the malaise that is certainly am packed to China for not only the last five years, but if you really think about it, the Chinese equity market's been a weak performer relative to global peers for the last two decades. So they want to know whether or not this is the real change. And then secondarily, they want to understand what's going to happen with the US election. For sure, everybody's intrigued. I think the entire world is intrigued about what's going to happen in the US and what does it mean for Hong Kong and China.

Obviously, people here are very concerned about the Chinese economic health and want to know whether or not this is going to break the malaise that is certainly am packed to China for not only the last five years, but if you really think about it, the Chinese equity market's been a weak performer relative to global peers for the last two decades. So they want to know whether or not this is the real change. And then secondarily, they want to understand what's going to happen with the US election. For sure, everybody's intrigued. I think the entire world is intrigued about what's going to happen in the US and what does it mean for Hong Kong and China.

George, it's always a pleasure. Thanks for making time to chat with us. George Maris is the CIO. He's also the global head of Equities at Principal Asset Management. Joining us from our studios in Hong Kong. This is Bloomberg Day Break Asia. Your morning brief on the stories making news from Hong Kong to Singapore and Wall Street. Look for us on your podcast feed every day, on Apple, Spotify, and anywhere else you get your podcast. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Siriusxmtheiheartradio app, and on Bloomberg dot Com. I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia

George, it's always a pleasure. Thanks for making time to chat with us. George Maris is the CIO. He's also the global head of Equities at Principal Asset Management. Joining us from our studios in Hong Kong. This is Bloomberg Day Break Asia. Your morning brief on the stories making news from Hong Kong to Singapore and Wall Street. Look for us on your podcast feed every day, on Apple, Spotify, and anywhere else you get your podcast. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, Siriusxmtheiheartradio app, and on Bloomberg dot Com. I'm Doug Chrisner. Join us again tomorrow for all the news you need to start your day right here on Bloomberg day Break Asia