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Tag: China

Szn 4, Ep 5: Opportunities Abound in Emerging Asia, with Herald van der Linde, HSBC

Published February 15, 2022

Herald van der Linde, head of Asia equity strategy for HSBC in Hong Kong, joins the podcast to discuss opportunities in emerging Asia.

Content Highlights

Emerging markets have under-performed developed markets, including in Asia — but this is not an entirely fair comparison (3:09);
What of the premise that much of emerging Asia are simply suppliers to China and therefore dependent on that country? This too is not so simple… (6:01);
Markets like Indonesia move independent of China and the U.S. With 250 million people, a growing middle class, and improved infrastructure, this is one area where there are opportunities (8:21);
Financial services still have ample room to grow in the region, with large numbers of under-banked individuals. The energy sector, meanwhile, is transitioning (12:45);
Background on the guest (19:26);
Consumers are a growing force throughout Asia, but individual countries have vastly different spending habits. An overview (24:38);
There is one country that nobody is really looking at in professional investing circles. The possibilities are enormous. That country is Bangladesh (31:55).

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Szn 4, Ep 4: The Case for the Turkish Lira, With Dave Fishwick, M&G Investments

Published February 3, 2022

Dave Fishwick joins the podcast to make the argument for investing in the Turkish lira after it dropped half its value versus major currencies.

The appeal is not just the value but the carry, resulting in the equivalent of 30% to 40% annual interest income. To Fishwick and his team, the trade is not only contrarian but an example of the type of idiosyncratic idea that has no correlation to other parts of the portfolio.

The conversation is not limited to Turkey but expands to the U.S., China, and other emerging markets during the second half of the episode.

(This podcast was recorded in person at the iConnections conference in Miami. The acoustics were not ideal and there is some background noise as a result. Apologies for the inconvenience.)

Content Highlights

The macroeconomic policy experiment in Turkey, where the country’s central bank took the highly unorthodox step of combating a sovereign crisis by reducing interest rates. The Turkish lira went into freefall as a result (2:24);
The lira looks attractive on a real basis, but the real appeal comes in the so-called carry, an often-forgotten part of foreign exchange markets. How this works (3:29);
Some background on the strategy by the Central Bank of the Republic of Turkey, which is on the surface frightening. But therein lies the appeal (5:22);
Why buy the Turkish lira when the CBRT is cutting rates while the Fed is raising rates? (11:07);
If the CBRT succeeds with this experiment, could other emerging market countries follow its example? The strategy is not unprecedented… (13:15);
Background on the guest (16:19);
Fishwick’s view on current markets. The market has re-rated asset classes, despite upbeat economic news (18:43);
The present situation may appear bizarre, but it not without parallel. Why it’s hard to be bearish for the longer-term (21:48);
Other areas of the world that are interesting for investors, especially contrarians (24:11);
There are “some similarities” with what happened the last time the Fed entered on a sustained interest hiking campaign (2004 to 2007), but many differences. The key? Watch the inflation data, though the Fed’s record on engineering soft landings is poor (27:05).

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Szn 4, Ep. 2: The Nascent Sino-U.S. Financial Cold War, with James Fok

Published January 18, 2022

James Fok joins the podcast to discuss his book ‘Financial Cold War: A View of Sino-US Relations from the Financial Markets’. In Fok’s view, the fates of China and the U.S. are highly intertwined, and neither country’s leaders want the conflict to escalate — but that could easily change.

Content Highlights

How the financial cold war is defined, some of the ways it is already impacting society and economics, and the risks of greater conflicts (3:06);
Is military conflict between the U.S. and China inevitable? (4:49);
The fates of the two countries are highly intertwined but the U.S. dollar and global monetary system have exacerbated imbalances (7:46);
Why the belief that the USD’s global role is good for the U.S. is a fallacy (11:02);
The world needs to become less USD-denominated if the financial Cold War is going to be resolved. There is precedence for this (18:00);
Background on the guest (30:00);
The state of China’s economy and where it’s headed (33:44);
China’s economic problems are clear for all to see, but the social implications are probably being significantly underestimated (36:49).

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