before i ask you what do you think and how you think the economy is how are you very good thank you here very nice to see you ok lets get an assessment of the economy since the last time we talk cant remember the last time weve seen massive downgrades yes a lot of downgrades i dont miss a quarter left do you think though the economys bottom at this point im sorry im a lot less confident ok then my views while reason being you know the economy is still being held hostage by covid and also by the property curbs you know people are not buying properties at all and so you know because of that you know any forecast you know based on the vagaries of covid control is basically groundless in my view so you know so i think the base case should be that you know the public control would continue for some time even after the big meeting in october and i think that would put downward pressure and more importantly put uncertainties into the system it makes it very difficult for people to include their expectation going forward what are your expectations for the party congress right i think theres a growing sense that somethings going to change with covid 0 thats a hopeful year i would say its wishful thinking in the sense that you know if they really want to relax the controls they cant relaxed you know much earlier than this riser they shouldnt be using no one should be using the big meeting as a sort of a watershed event so it is a meeting of continuation and those consolidation and also the senior leaders of china is out of the country already and i think that is the first time in i know in my memory ever you know they went out of the country for a national visit before this kind of big meetings ok i guess one last thing on covid 0 why do you think theyre sticking with it and why do you think theyll continue to stick with it because you answered that question you get almost everything else correctly right as far as academics policy thats why its hard to say right so my guess is as good as anybody elses guess but i would say that because the way the conservative approach when it comes to cover lets face it well because 99 percent of the chinese population population hasnt contracted colbert so people probably not as immune as they should be at this stage so even though the cold the virus has mutated to a weaker form but its hard to sort of you know be certain you know what kind of effect it had on the chinese population there has been some debate on what china is actually entering into some sort of recession why would a recession in china look like other parts of the economy already in a recession i think its a grocery recession in the sense that you know youre seeing growth read off of chinese gdp coming down ise already in the first and second quarter especially in the second quarter its very very close to zero so you know because of the lockdown and also because of know ise of weather weather problem and power outage problem so i will say that you know some sectors are really in recession you know for example property sector so property investment is down over 7 percent year on year and its still decelerating the retail sector is obviously in recession as well you know people are not spending people rushing to pay off mortgage and people are rushing to save so the the the the increase of banking deposits in the banking system you know has been one of the fastest in recent years so you know all of this is seeing that you know yes some part of the chinese economy is clearly in recession but then some other parts are doing ok you know for example chinese exports has been very very strong and i think that surprised everybody in the market and also the chinese manufacturing sector seems to be holding up fairly well to make chinese products to export to foreign countries well speaking of exports a weaker currency helps you do that what do you make of the weak currency now i mean its weak against the dollar its not as weak against other the basket for example is there do you think theres a line in the sand what more do you think authorities can and will do well the lines that have been used to be seven right so now that thats gone broken yes ill cancel the next office seven point two no one should be surprised by it by the weakness in the yen because fundamentally speaking you know the economic growth is slowing down so even though this year for example we have a record twice the plus year for some reason the chinese forex reserve is not building up so thats putting pressure on the chinese yen i know so you know because of the divergence of monetary policy between china and the us that is also putting pressure on the chinese yuan as well so the chinese obviously has a easing bias while the fed is continue to hike very rapidly so all of those saying that you know the the pressure on the end would continue what do you think that at least when it comes to what are policymakers makers most uncomfortable with at this pace theres so many things that is you know most people are not comfortable but then for some reason theyre unwilling for example to relax theyre called it control so because the the effect on the population is unknown so you know if the fed hiked too aggressively for example then the falling demand will continue to spring then it would put even further pressure on the chinese exports which has been holding up the chinese economy so far this year so that is probably one of the few sectors that is still growing this year and also the property sector i think is selling for like a slow train wreck that is happening ryssdal property investment is down property sales is down basically going into august for example the high frequency data is showing that you know in many of the chinese cities probably sales is down especially in the top 30 chinese developers you know were seeing slowing property sales across the board and so thats that has the effect on the upstream and downstream of the property sector and also have a huge impact on chinese consumption in terms of how the market prices this slowdown in the property sector and a train wreck as you describe it do you think if we priced that in already though i mean everything from credit to price to book what im trying to get to is we know its a slowing story but its it what else have we not seen here it has been cheap for a year or so as in the last year lee last year when we forecast a slowdown or a correction in the market no one wants to believe us ise or if it happened it broke the 3000 level earlier this year so i would say that it is cheap ise but cheap is not the reason to buy in ise earth is cheap enough so if you if you look at the market in price risk premium and compare it to the levels in the history ise is still higher than 2012 when when the us start the temporarily starting to starting to tighten and camping and then as it is is actually not as cheap as 2016 after the 5000 paul allen stock market bubble crash so i would say it is cheap but it has been cheap for a year and cheap is not that good a good enough reason to buy so i guess weve been asking all our guests theres what do you hide right have the fed this week not many central china where do you hide year globally i mean when theres global risk you know there is still rising rates so its hard for for us to recommend clients to go into the market and just close your eyes and buy and be courageous and catch the falling knife its hard to make that kind of recommendation but normally when you know in such an environment in a risk river is a risk environment then we tend to see the us dollar raising the vix either marketing tribal authority raising an emerging market currency weakening and also maybe you know some of the for example the chinese bond you know because the populace is still easing so the bond you the chinese bond you may make all time low at some stage