Amundi's Defend on Global Markets, China

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00:00Unlike this, there seems to be a bit of a momentum unwind in markets right now.

00:05How do you read this?

00:06Is it a temporary dip in the opportunities to buy?

00:09Or is this sending warning signals to the global investors?

00:15I think we are willing to distinguish the short-term dynamics with the medium-term perspective.

00:20So on a short term, I think really this is short.

00:25And getting along with the noise we are seeing on the tariffs,

00:30on the situation between the United States and China talks going on more medium-term,

00:36then there are risks related to the debt sustainability, inflation fears,

00:42concerns on the independence of the central banks.

00:45But for now, it's just a profit-taking moment, I would say.

00:50What's interesting, I found at a time when, of course, the U.S. equity rally is a little bit wobbly,

00:56the proportion of companies beating earnings expectations this quarter is the highest since 2021.

01:03So there's this contrasting signals.

01:06It continues to surprise on the upside that the earnings reporting season, right?

01:11And analysts have been revising upward, progressively, quarter by quarter, their expectation.

01:18My point is then, well, we have seen on the tech sector, right, this AI rally.

01:24The important thing is how it will spread to the other sectors.

01:28So we really need productivity to increase.

01:31And for this to materialize, we need a spillover from tech into the other sectors.

01:35Yeah, well, that's a good point because, you know, while the market might take a breather,

01:39many of them are taking that breather away from the more speculative names, including the AI speculative names.

01:45Would you agree?

01:46Yeah, yes, I agree.

01:48And actually, probably looking at industry level beyond sectors, communication services,

01:55so might be a better way to diversify the portfolio.

01:59I really think that going into the remainder of the year, the real key word is diversifying your risk on the portfolio.

02:08That's right.

02:08Let's talk a little bit about the China-U.S. relationship because, of course, we've had six months of tariffs right now.

02:16First of all, what direct impact would you say that that has had on the U.S. economy as it relates to stocks

02:22because inflation hasn't really spiked up yet, right?

02:26And then there's a lot of hopes are being pinned on this potential meeting between Xi and Trump,

02:32which I believe you don't think is necessarily a market-moving event.

02:37Well, you know, on the tariff, I would say it remains fluid given the way the subject is approached.

02:47What we saw is really on rare earth the stance of China saying, look, we have something to bargain,

02:56which is not necessarily the position of every region or country.

03:01So they will be on the same level at a time where we see exceptionalism on the U.S., on the tech sector,

03:11directly complemented by exceptionalism in China on the tech sector as well.

03:18On tariff, I think that we've been surprised by the limited effect that we have seen so far,

03:25probably the weakness of the U.S. dollar, in particular, how the beginning of the year

03:30has been helping along with the liquidity that this has created.

03:36And still you see how markets and geopolitics, geoeconomics are intertwined, I would say.

03:45What's your outlook then for some Asian equities, in particular in China?

03:48There's always this vector of the national team coming in and propping up stocks.

03:52In fact, I think it was Goldman who recently just upped its forecast for Chinese stocks by 30% through 2027.

04:00There could be policy support.

04:02What are you looking for out here?

04:04Well, in general, Asia is a way, a nice way to diversify your portfolio,

04:09not only the short term, but in the medium term as well,

04:12because of the nicer demographic and growth perspective.

04:16When it goes to China, we just revised up our GDP expectations for this year and next year.

04:24We think they are well on track this year on the 5% target.

04:29Sector-wise, probably it's on batteries.

04:34It's really transformative, right, the technological sector in China.

04:41And this is where we are looking at maybe on electrical vehicles with the anti-involution.

04:50We might be more cautious.

04:52But probably there has been a shift in the policy stance, which is adequate, from all in to just enough.

05:00And they are really measuring the way to transform the economy into a more consumption-driven economy.

05:09And when I look at the AI effort, what to me is very strategic is what they are doing.

05:15AI is for the people.

05:17It's for increasing the wealth of the nation, which is strategically quite smart, I would say.

05:24Before we wrap up, do you have a hot take on gold?

05:27I mean, we're talking record highs.

05:28What a blistering rally we've seen.

05:31Central banks have been buying it up.

05:33PBOC here in China, 11 consecutive months through September of buying and accumulating gold.

05:38Obviously, it's a hedge against the volatility that we've seen.

05:43It's come off boil.

05:45But has it seen its peak for the year?

05:47Well, there are plenty of reasons to see gold prices to move higher, the one that you were listing.

05:53So that we might see in three years a target around 5,000.

05:58What is different nowadays that retail investors start entering the gold trade?

06:06And this is creating this kind of swings on the prices that we have been seeing in the recent days.

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