00:00Well, Joshua Mahoney is a chief market analyst at Scope Markets. Hello to you.
00:05So Chinese and Asian stocks have surged this week.
00:08What would you say the primary drivers are behind this rally?
00:14Well, there's certainly a feeling of optimism around trade talks at the moment.
00:18Globally, of course, there's been a big focus on Asia recently with the likes of Japan getting a deal across the line.
00:24We've seen the same for the Philippines and Indonesia.
00:27Just this morning, I was hearing about the potential for a breakthrough in talks with India.
00:34And so there's a feeling that one by one, we see these countries striking trade agreements with the U.S.,
00:40really staving off the possibility of a sharp ramp up in terms of tariffs.
00:44And that really, despite the fact that these agreements do provide tariffs,
00:49they are with each agreement providing the basis for the next agreement to be made.
00:53So certainly there is a feeling that right now China isn't necessarily in as bad a position as many had thought coming into Trump's presidency.
01:02And in my mind, it's the Achilles heel, which is the rare earth minerals and materials
01:06that really has provided China with the ability to stand toe to toe with the U.S.
01:12And in my mind, will probably lead to a more advantageous trade agreement that is good for both nations rather than just for the U.S.
01:20With record southbound inflows from the Chinese mainland into Hong Kong stocks,
01:26what do you think that says about the domestic investor confidence in the Chinese economy?
01:34Well, it's an interesting one because, OK, there's been the big story over the period that Trump's been in power for the second second time,
01:43where it's been inflows into China, inflows into European stocks and its international investors.
01:50And by and large, it's international investors that are investing in the likes of the Hang Seng.
01:54And it's more the mainland investors that are investing in the likes of Shanghai Composite and the like.
01:59However, the fact that we're seeing domestic investors really getting on board with this story really shows a number of things.
02:07For one thing, a confidence that the economy is doing well and a confidence that people are essentially able to invest.
02:17Of course, it's been much made of the sort of real estate crisis within the country, the debt crisis within the country.
02:23Maybe it's not necessarily as bad as many had thought, because there is money floating around that's going into these stocks now.
02:30And certainly people feel like there's a light at the end of the tunnel,
02:32given the huge amount of uncertainty that has been sort of looming large over the Chinese economy thus far.
02:39Joshua, semiconductor stocks have been on a bit of a tear globally, haven't they?
02:43What do you say the core driving factors driving this investor optimism is?
02:49What would you say it is?
02:50I would say for one part, we've already seen sort of your sort of precursor earnings coming out.
02:57The likes of TSMC, who provide the chips for many of your big names, the likes of NVIDIA and the likes.
03:03They already came out of the blowout quarter.
03:06So that sort of indicates that NVIDIA is probably going to come out of a particularly strong quarter.
03:10We've seen very high capex numbers from Alphabet already.
03:13Next week, we're going to see another four of the Mag7 reporting.
03:17And so there is a feeling that this quarter is going to be a very good one when it comes to semis,
03:23when it comes to the tech sector, the AI story.
03:25At the same time, people are feeling more confident that we aren't necessarily going to see a recession,
03:30that the U.S. economy is doing well, that actually we will see trade deals rather than a massive ramp up in terms of tariffs.
03:37And that sees people wanting to jump into stocks.
03:40Now, when I'm into stocks, you can do so by getting onto a single company or you can do so by buying an ETF or a tracker.
03:47If you're buying a tracker or an ETF, you're essentially investing in the entire market.
03:51And when some of these stocks are very heavily overweighted, as many of these tech names are,
03:57they, of course, are going to get significant inflows coming into them.
04:00So, yes, the tech sector generally will lead the way.
04:03But there is a feeling that the tech sector is also the area of major growth and innovation.
04:08And therefore, when people buy the dip, they often buy the dip for those names, first and foremost.
04:13Joshua Mahoney from Scope Markets.
04:15Thank you very much indeed for that.
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