Give us a sense of your take as what was Behind these Gyrations that we've been seeing on bond Markets in the last couple of weeks Well some of it has been technically Driven we had some action And some some liquidity issues in the Market that we're spiking up but i think You know in general response to the Substantial Fiscal package um that's being passed as We speak Uh in the us and so you know it's not Surprising to see Uh you know bond rates uh tick up Modestly in this environment Yeah so kip you know that brings me Nicely to just talk about how much of This is stimulus based on On sentiment the fear of inflation which Might result from this so How much is it also down to structures In the market Which perhaps make it quite fragile to Any changes in liquidity As well as funding requirements as well Well we think it's probably a bit of Both i mean over the long term We are actually not concerned about a Runaway inflationary environment We we believe that inflation you know is Likely to tick up modestly over the Cyclical horizon But there's there's important factors in
Terms of you know fiscal fatigue after a While In terms of demographics in terms of Technology Technological disruption that we believe You know will probably keep inflation Contained Um and and we won't see a situation like We saw in the 1970s Yeah so kim i mean you could draw i Suppose some comparisons To perhaps what happened in the bond Markets uh just uh during the whole Taper tantrum but i'm not going to go There particularly but It gives us a sense of how that informs You as to what's likely to happen This year and also what about the trends That you're seeing Uh especially fixed income through 2021 Now Well i mean i think what you'll see is Just a lot of volatility in markets um You know certainly we Believe that you know confidence is Improving particularly with the vaccines Coming online that you will see an Uptick in growth Globally um you know particularly in Markets uh Like asia that have come back online and Then certainly in the us and uk who are Rolling out the vaccines At a much quicker pace and so a lot of
Reason to be Confident in the market but a lot of This is also priced in Um and so it's important that i think we We look at you know what are the risk Factors to the downside Still a lot of volatility with respect To how the market will Ultimately recover we talk a lot about You know potential long-term scarring as A factor of the covid crisis that we Have not um yet Realized the full uh benefits of or Or circumstances of um and so in all we We have a more sort of cautious view On on the market and um and we're seeing Clients do the same thing so It's been interesting in terms of the Divergence a lot of our institutional Clients Have taken this more cautious view i Think recognizing the uncertainty and Volatility that That lies ahead on the individual side Particularly here In asia we've seen a bit of a barbell Approach last year we saw a lot of Clients Remain in cash amidst the uncertainty This year we're seeing sentiment improve But still again a little bit of barbell Response some clients Remain in cash others are very much risk On um in line with the confidence that
They're seeing um in global markets and And are focused on areas like emerging Market equity so you're definitely Seeing A difference in terms of how clients are Allocating capital in this environment The bond market kim where are the Opportunities On the one hand we talk about the huge The massive volatility Uh in the bond market but when you take A look at china it was pretty stable Some say it is a haven now how do you View the chinese bond market Sure well i mean i think that's what's One of our biggest areas of focus is Asian credit uh in particular of which You know as you know China comprises about 50 of both the High yield and the investment grade Market So china is a driving force there we Have Thought that that market looked Attractive on a relative value basis Versus u.s and european markets A lot of our clients were seeing strong Investment in that area so we continue To be Positive on asian credit and china Credit in particular As is always the case though it's all About active management And it's about you know sussing out
Where where the top performers will be And and avoiding parts of the market That we think Will be more difficult and that that Goes through for for china as well Um but but we we do have you know some Confidence there and are continuing to Allocate for our clients Were you disappointed with china's gdp Target of about In axis of six percent when pimco was Forecasting eight percent could that Mean perhaps The economy is plateauing in a way and That could mean Sustained stimulus for developed Economies Well we definitely think there's going To be sustained stimulus for developed Economies i think the lower growth rate In china just just means that they're They're very cautious on making sure That they don't have overheating within Their Own economy and they're quite focused on Making sure That they have sustainable financial Markets going forward and so You know focusing on on areas that you Know perhaps Are are lower quality shoring some of Those up And just making sure that the the Economy as a whole
Is is running at a sustainable pace so All of that we think is Is positive but we also think you know Makes you know for Other reasons global stimulus still a Going concern Across most of the world But credit growth in china is already Tapering what risks Do you see no i i think you're right we Definitely see Um the the credit growth tapering there As you note um but we're also you know i Guess More focused on places uh where you know We've seen stronger balance sheets so You know some of the soes and things Like that um you know perhaps in worse Shape and so You know we're looking at you know other You know banks financial organizations Who do have stronger balance sheets and And can weather some of these storms um You know More thoughtfully than other parts of The market so again being being quite Um you know differentiating in terms of Where we allocate Uh kim you know perhaps as we come out Of pandemic We this pandemic we're in a unique Position to Reshape things and you know what can be Done now and what can be put in place
To bring women back to the workforce in A More egalitarian sense and shape perhaps A more equal future here Well i think we learned a lot through This through this period and i and while I think you know it has been taxing Particularly on women we haven't seen Some of the data yet but we know that You know All of the stresses of you know Educating children at home And having to to work in an at-home Environment that likely has been Um more of a pain for for women Um and so we have not yet seen the data But we would expect that you know maybe This has caused more women to leave the Workforce so on a short term this could Actually be You know a negative impact which we have Yet to see flow through But over the long term i think it is Much more positive for women you know The fact that You know we've been able to test and Prove A work from home environment which has Necessarily You know extended flexibility to women Which can be a key driver of retaining Them in the workplace So we've done it now and i think a lot Of this is going to persist going
Forward That will make you know our talent pool A lot more resilient And inclusive in terms of ensuring that That women stay in the workforce so Perhaps You know a short-term uh uh you know Deficit but over the long term i think All these things are really positive Towards a robust female workforce
