YouSaid · the spoken record

Ting Lu

lines on the record: 31
first: 2022-04-26
most recent: 2022-04-26
sittings or episodes: 1
sources: podcast

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“Well, I think given what we've just discussed, all the risks and concerns, I think we're definitely in a situation where these factors have inevitably complicated the near-term market outlook for some investors. But I would say the last key message for me would be that if we take a step back, I think the strategic investment case for Chinese equities remains intact, i.e. it's still the second largest and most liquid equity markets in the world. The capital market but still developing and Chinese equities are still underowned by foreign investors. We talk about less than 5% of foreign ownership in the onshore equity market. And I still think that is the place for investors to look for structural growth opportunities on a global basis. Now, of course, Kuwait said that the longer-term potential growth may come down a little bit, but 4-5% is still.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think we have a view that previously you might think Chinese potential growth 5 to 6 percent, but we think we might be settling into a slower growth. Because you are trying to solve the housing access problem, because you're to solve your energy security problem or your regulatory objective, when you're trying to achieve some other goals that will be cost. And the cost to us will be slower economic growth. So we do think over the next few years, even if all these initiatives and policy objectives are being achieved in a rather smooth fashion, perhaps Chinese economic growth will only average between four and five percent growth rather than the previous thought, five to six percent.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“So if we look at all the headwinds we've discussed, lockdowns, property sector, geopolitical tensions, regulatory crackdown, big political transition, what is your outlook medium term way for the economy in terms of growth?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“I think the reality of a trade relationship is that China is such a big part of the global supply chain and a significant share of global trade market. It's very hard to completely shut China off. This is just from a reality check perspective. It's hard to see a complete decoupling, at least not in the foreseeable future. But the other part of the reality is that Russian invasion of Ukraine is just on top of what already happened that”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“One area that we didn't touch on, but I think makes sense too in light of this big political year in particular, is, of course, U.S., China trade tensions, which had been a huge focus during the Trump era, has lost a little bit of focus in the recent period, in part because of the Russian invasion of Ukraine, which has really shifted the geopolitical focus to that area. But if you look at this big political event this year in China and the relationship between the US and China going forward, what are you focused on in terms of thinking about the trade relationship, where it's headed and what it means for the economy?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“For trying to, given how influential policy is to companies' fundamentals. And based on that logic, if President Xi is going to extend his power over the next five to ten years, I think some of his policy directions will also be quite important when it comes to investing in trans equities. And here we believe that sectors such as semiconductor, electric vehicle, green energy, industrial technology will continue to receive positive tailwinds. And I think these sectors will be in a better position to deliver sustainable returns to equity investors.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think if we look at this political event in a standalone manner empirically, the agreement market actually tends to perform quite well in the run-up to the National Party Congress, which happens every five years. And I think this historical pattern reflects market expectations that policy accommodation will be provided by policymakers to ensure some sort of economic stability ahead of the transition. And I would say from a top-down perspective is one of the key underpinnings to our relatively constructive views on trans equities over the next six to 12 months. Now, more specifically, I think from a longer term policy direction standpoint, I think it's always important for investors to align their portfolio with policy directions when it comes to investing in China. I guess it's true everywhere, but I guess it's more so.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“And the financial market, and certainly behind the scenes, I think who's going to be the number two, number three, number four, so on the Polyburea Standing Committee that could have some political implications, but at least on the economic and financial side, we can see pretty concrete signs of this is going to be pretty important.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“All else equal for fear of accused of a corruption and potentially sort of not really being promoted in these political transition years. Just one example of how that could impact the economy. On the financial side as well, I think these political calendar or big events, they carry significance in China. If you think about last year, all the regulations, all the announcement seems to happen after July 1st. the CCP is the hundredth anniversary. we kind of feel the policies are being front-loaded this year so that ahead of the 20th party congress perhaps the third quarter GDP would look decent but after that perhaps the growth may slow a bit because you already spend all the money you allocated for this year due to front loading and getting a good third quarter so those are certain examples of how this could impact the economy”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, a couple things. This is quite unusual because if you recall, President Xi is the predecessor, the Janzo Min, he was the leader for 10 years and then Hu Jintao for 10 years. And then now President Xi is about to get his third term at the 20th Party Congress in October, November time frame. What that means for the economy, for the financial market, there's a lot of implications. I'll give you a couple of examples. One is when we think about infrastructure building, these infrastructure building tend to be lucrative for the contractors and local officials previously had been accused of corruption related to these projects. So what we are seeing more anti-corruption investigations going into this year and we suspect the local government officials will be a bit reluctant to engage in a lot of infrastructure building.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Argue that we think we're naturally transitioning from an announcement phase of the regulation cycle to an implementation stage where we would like to get more clarity and transparency of the regulation measures. And I think investors should be in a better position to price these regulation impacts on earnings as well as on valuations. I think ultimately, to state the obvious, the market doesn't like uncertainty, but I think we are getting more transparency about regulations. And hence, I still think that China is still very much investable from that perspective.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Well, Alison, I think this is a fair question to ask, and our answer here is yes, China is still investable, at least from a regulation perspective for a few key reasons. First, Chinese regulators have repeatedly emphasized that the very heavy-handed regulation crackdown, like the one we had for the Chinese education sector last year, is unlikely to repeat. And if that's the case, we think that the worst is likely behind us in terms of the regulation shocks to the equity market. And the second reason is that we actually compiled a proprietary regulation tracker, which shows that the regulatory tightening intensity level already peaked in late 2021. And since then, the intensity has moderated quite meaningfully over the past few months. And last but not least, I would also”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Broader issue that you mentioned is that the Chinese government has been cracking down on certain sectors, this regulatory crackdown that we've been talking about for quite some time now, really since last year. And it's really stepped up when the government started targeting Chinese tech leaders. So if you think broadly as the government tries to flex its might in so many ways, the overarching question that investors have been grappling with is ultimately are Chinese assets still investable given these risks.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“And from that perspective, we would argue that a good portion of these concerns and risks is already well discounted in prevailing equity valuations. And in fact, we would argue that China is still trading below our expected fair value and there could be potential for recovery, for valuation down the road as long as”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“These companies, especially after the holding foreign company accountable act, has been written into law at the end of 2020. U.S. trend attentions have certainly intensified over the past two years, and it started from the trade war between the two nations, but later on expanded into other strategic domains, including capital markets, i.e. the potential delisting of Chinese ADRs in the US market. And I think all these risk factors have contributed to the quite weak performance for Chinese equities over the past two months. That being said, everything has a price. And I think equity investing is all about assessing risk and reward. And at the moment, Chinese equities are trading below 10 times forward price to earnings ratio, which is roughly speaking one standard deviation below historical average.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“And I think clearly we are going through a rough patch for Chinese equities. The market is down about 20% so far this year. And to a certain extent, as you said earlier, Alison, I think we are in a perfect storm situation where we have a number of economic and regulation headwinds all going against the market at the same time, when he just talked about the COVID outbreak, the poverty market downturn. But on top of that, we also have Chinese ADR delisting risks from the US and the spillover of geopolitical risks from Russia to China. Chinese ADLs are essentially Chinese companies that are set up overseas and are currently traded in the US market. And one of the pretty significant concerns among investors over the past two years has been the potential delisting risks for”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Happen particularly when in history when we saw the currency movement, once expecting one-way expectation that's formed, it's very hard to turn it back. So I would imagine the PBOC through their daily fixing to express some concern over the extent of depreciation that we have been seeing.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Differential movements, and also we have the commodity prices and inflationary pressure. So they decided not to cut interest rate. But at the same time, there seems to be okay to let currency weaken a bit through their daily fixing. We're seeing that they are basically telling the market that some depreciation is okay. I think that makes some sense that when your economy is under pressure, you want to depraise your currency in a low profile way. You don't want to be so high profile, cut your interest rate and potentially cause foreign investors to reduce their positions of CNY currency. At the same time, if the currency themselves are depreciating, that helps your exporters, that helps your growth on the margin. So that might be something that's happening. But given the style of Chinese policymakers, I would be very surprised to see they continue to allow this significant depreciation to”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, interesting you mentioned that and seeing why over the past few sessions turned from our performer and a very resilient currency to a sharply weakening currency, you know, right after the Russia invasion of Ukraine, we saw other EM currencies depreciating, but Xinhua was pretty resilient the past few days that Xinhua has depreciated from versus the dollar depreciating from 630 to almost 660. So quite a big move by Chinese standard, what is really going on. I think the central bank is a bit conflicted. On the one hand, Chinese economy is facing downward pressure. At the time, the Fed is hiking interest rate. So when you think about capital outflows, potential currency volatility, they sort of decided not to cut interest rate at this moment and not to even further exacerbate that interest rate.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“China, a lot of local governments rely on land sales for revenue that had implication for consumption, for confidence, for upstream sectors, all the steel, cement, production, so the repercussion can be quite significant given the degree of decline we have been seeing.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think that's right. I think the direction, when we look at the numbers, the population growth, urbanization, a lot of these tailwinds are fading. So from a demand, fundamental demand point of view, we do think the longer-term demand for housing is going to decline. So you want to engineer a soft landing. So the direction should be slower pace of growth or even fewer apartments being built each year. The key question is that you want to control that speak, right? You don't want to drop when I say 50% down yarn year, that doesn't sound like a soft landing. And that's not what you want, even if you think that the end game is fewer apartments being built. 5% year decline, you can run that over the next few years or sort of deflate a potential bubble rather than just burst it and that would have implications on local government financing because in”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“And is there kind of a silver lining from your perspective then that there isn't as much desire and instinct to go to leveraging again? That we think about the downturn of the property sector that was potentially very overheated. So are we seeing a correction that was long and coming? I mean, can we take that away and say some of this will ultimately be good for the Chinese economy over the medium term, even if near term it's generating some downside to growth?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“modern housing stock versus old, outdated, and poor quality housing units. So you have that potential demand. You can tap into to help out with your cyclical growth outlook versus now after, you know, 10, 15 years of very fast infrastructure building, a lot of apartment buildings being put in place, you don't have as much or as potent of this demand you can tap into, you can stimulate and then get a very robust growth impulse. That's number one. Number two, I think the current administration, if you think about the leadership of Xi Jinping, he's pretty into thinking about deleveraging even back in 2017, 2018, back downturn was related to this idea of cracking down shadow banking and controlling leverage. And if you think about this round, the housing sector was also because of this push for deleveraging.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Previously, because of the planned nature of the economy or the government has a lot of control over the economy, policies tended to be this counter-cyclical buffer that if external demand is super strong, then Chinese government can do less of a policy support and still have a stable growth and vice versa when the external demand is not good or other shocks happen, the government can provide support to the economy typically via infrastructure building or property sector relaxation to keep the growth roughly within a reasonable range. What's different now? I think a few things. One is that if you think back in 2008-2009 when the global financial crisis happened, that was an exogenous shock to China. The developmental stage is different now. Back then, you had a lot of demand for infrastructure building, a lot of demand for people moving into these”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“So, when we think about these major drags in growth, historically, we are used to Chinese policymakers stepping in when they see growth threatened to this extent. Is that happening this time around? If so, how much cushion could that provide to the blow of these factors?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think it's a bit like the market can only focus on one thing at a time. It's still pretty stressed situation. In fact, the two negative shocks, housing downturn and the COVID, they interact with each other and reinforce each other. When you look at the January-February property sales that we're tracking, it was down 30% young year. Not great, but come March, April, when we had this latest outbreak. Now we are tracking close to 50% down year on year. You can imagine the central bank may be lowering mortgage rate and cities may be relaxing purchase restrictions. But if you can't go out of your apartment, it doesn't help. You don't have transactions. So we're in this situation where before this latest outbreak, we saw some of green shoes or some hopeful signs of stabilization in property transactions. But now all of a sudden we got another leg down.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Me switch gears for a moment to another key concern in the Chinese economy that has been a focus for a while now but seems to have fallen from the headlines the property sector in China. Is that less of a concern or is it just getting less attention right now because of the shift in focus towards the lockdowns?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, it's a pretty amazing recall, you know, more than two years ago at the beginning of 2020, China had the highest lockdown index, meaning the lockdown was the strangest in China versus ex-China. After that, for much of 2020 and 2021, China's lockdown index was much lower than the rest of the world. And coming into March, April, we're seeing another reversal that China right now has a lockdown index around 40 and at the peak that was February 2020 was at 80, whereas everywhere else is more like 1020 lockdown index. So we are in the situation. That's why a lot of people asking, are manufacturing moving out of China? Because before China had the stability and advantage of producing, whereas other countries are battling with COVID outbreaks, and now we're risking seeing the reversal of that.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“And varieties of indicators that number of cases are still very elevated, but at the same time, the number of places being impacted is declining, tidy uncertain. We don't know, is it going to reverse or not, but we're seeing supply chains, for example, around the middle of April, we saw arrivals and departures at Shanghai ports. That was the lowest point. And after that, there is some sequential improvement. And similarly for within city traffic congestion measures and a few other indicators. So my takeaway is that this is the worst wave since early 2020. Number of cases is still very high. We just got news over the weekend about the Beijing restricting activity because of cases. But so far, it seems like we've seen at least a local peak in cases and activities show the sequential improvement margin.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, certainly that's the number one question that we are getting these days, especially when the rest of the world is opening up, whereas China is kind of a stuck in this situation. I tend to emphasize that this is not really by choice in the sense that if you look at elderly vaccination in China, it's still at relatively low levels, below 60% of the elderly population, 80% above have vaccinated. So if the Hong Kong experience is of any guidance that scares the policymakers and frankly a lot of citizens in China about opening up. So we're stuck in this situation when Omicron is very contagious, but we still have the zero COVID policy, which in turn means a lot of restrictions and a lot of pressure on the economy. What is really going on right now? What we are seeing tracking daily information.”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT
“China is our topic for this episode because it's facing multiple headwinds. We have COVID lockdowns, property sector worries, geopolitical tensions, just to name a few. The lockdowns in my mind are front and center just because they have the potential to significantly slow economic growth in the country and prolong the supply chain disruptions that remain very much in focus. So let's start their way. What's your read on the lockdown situation and the risks around it right now?”
2022-04-26 · Goldman Sachs Exchanges · How China’s ‘Perfect Storm’ and Economic Headwinds Are Affecting Markets and Investors · IDENTIFIED FROM THE TRANSCRIPT