Investors Await Clarity After Xi-Trump Meet: UBS's Tay

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00:00Kelvin, which sectors or asset classes would be most vulnerable if we see things maybe not come

00:07through on the US-China front as things have been teed up between the US and Chinese trade

00:13negotiators so far? Yeah, I think in general it's beta driven. So if the deal actually doesn't come

00:21through, you know, you're going to get a top-down sell-off of basically almost everything in the

00:26US and in China itself. It's basically a top-down liquidity flow kind of event. So we do expect

00:31the tech sector, probably there'll be some profit taking there. Good in the fact that they've

00:36actually recovered very strongly since the bottom in April this year. I think if you talk about

00:42Liberation Day to now, the big seven or the big six have actually recovered by almost 65%. So that's

00:48basically what's driving the US equity markets at the moment. So if, you know, things derail where

00:53the deal is concerned, then obviously there'll be quite a fair bit of profit taking on that.

00:57And don't forget about the Chinese stocks as well, because until now, a lot of the tech stocks in

01:01China has also done really, really well, especially the Hang Seng Tech Index. And there will be some,

01:05there will be some vulnerability there too, if the deal doesn't come true.

01:11Kelvin, to your point on Chinese tech, and we do have a chart that illustrates this as well,

01:15it's really been a terrific, well, year or a few months for Chinese tech stocks. I know you really,

01:21really like this sector, but when you look at the run-up, do you buy at these levels?

01:29We still think that they are attractive, because I think compared to where they were before,

01:33compared to the previous high, I think the Chinese tech sector has still some room to go.

01:37And the results have actually been pretty good, where the second quarter results are concerned.

01:41So we're all eagerly watching the third quarter to see whether the results are still keeping in pace,

01:44and whether that path is sustainable. And if it is, then obviously there's still some room for

01:49the Hang Seng tech and especially the Chinese tech stocks to actually run. But what we do like right

01:54now is also the broader index. And we've actually recently upgraded China to attractive, given the

02:00fact that valuations are still very attractive, and that the growth, earnings growth for these

02:05Chinese stocks have actually turned pretty positive. On top of that, we do think that, again,

02:10the positive sentiment coming in from a deal being done with the US will likely boost these

02:14Chinese stocks up a little bit more. Not withstanding the fact that, you know, the Shanghai A

02:19shares index is now pretty much at a 10 year high. We do think that the A shares are likely to do

02:24better because of this disparity in valuations between the A and the H shares.