Just give us your sort of view of how Geopolitics uh is overlapping with Market strategy right now how should Investors be looking at the situation as It unfolds in taipei Sure thank you very much for having me Look it does add to the volatility that We're seeing in the markets at the Moment as you know especially in the fx Markets and the bond markets the Volatility is very high of course this Is just one thing that the market didn't Need at the moment investors didn't need At the moment because the market when It's paced with multiple Factors of uncertainty it does see Volatility go higher and it doesn't Change our strategy at all we are going Defensive uh we are not buying into the Rally that we've been seeing in the past Few weeks and it doesn't change the Strategy at all from our point of view Well we're continuing to get headlines Related to china's reaction out of the Xinhua news agency china's pla people Liberation army saying it will conduct Military drills on august 4th through 7th so of course that's beginning two Days from now On thursday Obviously geopolitical risk is Incredibly hard to hedge lawley but how Do you hedge Further deterioration in the
Relationship between the world's two Largest economies if we're talking Further separation and all of the Implications that follow with that is That something you more tangibly can do Look i think from china's point of view They're in a tough stop as you as you Know from economic points of view um Their consumer demand is very weak um There are two um trading partners us and Europe are on the verge of recession so They have not too much of a leverage in This conversation in our opinion and we Are neutral in chinese equities we do Believe that you know we need to see Monetary and fiscal policy coming into The picture to really you know start Economy again and again this adds to Um that's again being a more cautious And defensive positioning to overall Chinese markets of course there are Places in china where you can really Invest in Sectors that are favored by the policy Overall and that stays as a long-term Strategy for us such as 5g smart Infrastructure Anything that does tell us that that Sector is very geared towards that Common prosperity which is here to stay So i would urge investors to take a Long-term view on this Well okay let's let's just talk about What we've learned from what has
Happened in ukraine The the parallel is not perfect but Clearly we are watching geopolitical Tension erupting in a number of Different locations right now ukraine is A is an interesting focus when we look At what is happening in taipei right now European energy prices Are absolutely skyrocketing right now i Think germany one year forward today Went through 400. france is even higher The economic impact of this is going to Be enormous over the next few weeks and Months lalay There you go those are on the screen Right now we're through 400 one year Ahead On german power prices today Should we be thinking about what is Happening here in europe and thinking About the impact that we could see Potentially in asia the the impact that We could see potentially on global trade These stories there are some parallels That maybe could be drawn between one or The other europe looks like it's heading As a through into a recession should we Be expecting similar things to Potentially happen further down the road When it comes to taiwan Look i think The the one similarity here is that what It would mean for inflation overall if This situation does lead to a
Renewal of Supply side pressures that is of course Going to make the feds and the ecb's job Even harder to bring those inflation Pressures down uh but For for europe i do agree the market is Really looking forward um in terms of Understanding that germany especially But also france italy they are going to Come under pressure because of those High regional gas prices and we can see That in the euro in in in bond market as Well euro especially has further Downside in our opinion and and again The whole thing does tell us that Whether it's ukraine related pressures Or china uh taiwan related questions Does tell us that you know it's going to Make the feds the ecb's and the bank of England's job much harder in the future Well talking of how hard their job is Obviously what they want to do is get Those inflationary pressures down yet at The same time they're confronted with Growth that already is starting to Deteriorate there's a narrative now in The market that they're not going to be Able to go as far that eventually the Data is going to be weak to the extent That it causes them to pause or maybe Even start cutting before previously Expected la la what do you buy in that Narrative do you buy it I think for um for europe especially if
It's tough i think they were smart in The sense that they hiked by 50 basis Point right now during summer when those Gas prices are not hitting income that Much but going forward it's going to be A really tough decision for september And rest of the year therefore they're Really not you know um saying that we're Going to hike in a major way we're going To be flexible and so forth they're Clearly very concerned about that for The fed again I am less concerned about the us in the Sense that the u.s is self-sufficient in Both food and energy so that tells me And it's in a better position in terms Of its pandemic savings it's it's very You know tight um labor market as well So i think the fed is going to continue Tightening in an aggressive session i do Not buy Into markets you know thinking that they They they're gonna pivot in in march Like next year i do not think that will Be the case at all i think they will Continue with their aggressive Tightening cycle
