00:00New tariff threats on top of, of course, what's happening between the U.S. and Canada, between the U.S.
00:05and European countries, how consequential could the latest threats on South
00:10Korea beef for broader risk of sentiment that could be more sustained in the days ahead.
00:15I don't think this threat is going to have a
00:20big impact. We have learned from the past that, you know, Trump loves to threaten.
00:25But then it breaks down. I think this seems also to be a more technical in nature talking about.
00:30The legislative process is not really fundamental.
00:32So I think, yeah, of course, Mark has been very strong with
00:35recently, so some kind of a pause of profit taking is likely, but I don't think he
00:40will have long lasting impact on markets.
00:45At least when it comes to some of those sectors that are being targeted, autos, pharmaceuticals, for example.
00:50They've not just been targeted, but they've been just very vulnerable to these trade negotiations.
00:55They're ongoing since last year. Should investors be a bit more careful?
01:00Approaching these sectors, not only in South Korea, but across Asia, here in Japan as well.
01:05Well, again, there is obviously a risk, and I think to me, though, the reason
01:10the real kind of risk here is more like on the currencies.
01:15In the sense that I understand that Trump is starting to threaten obviously with tariffs, but I think...
01:20the real kind of target from the President Trump is to have all...
01:25the Asian currency to appreciate. I think this will have a more long lasting impact.
01:29I think it's more...
01:30a little bit more, it's interesting to have a closer look at the industry to respect,
01:31and we see there also in Japan the Japanese authorities playing the same game.
01:34So I...
01:35I do think that the impact is more on a currency level while in terms of earnings, in terms
01:40of impact of the overall market, I think especially the equity market should be very contained.
01:45Almost, I would say, every sector.
01:49If that's the case, how much
01:50further do you see the dollar falling?
01:53Well, we are very
01:55bearish on the dollar for a lot of fundamental reasons.
01:58The dollar is still
02:00expensive or almost any measure.
02:02The Fed is probably likely to cut rates.
02:05The US economy is strong, but not as strong as it used to be.
02:08And we see this kind of
02:10and the globalisation trend goes on.
02:11So there are, let's say, fundamental reasons for long term and short term
02:15reasons why we expect the dollar to continue to decline this year as well.
02:20As investors rethink US assets, their attractiveness,
02:25what do you make of what we're seeing in stocks?
02:28I mean, this week we're watching out for
02:30earnings from the big tech names. We might see US stocks
02:35versus, say, Japan or Europe peers continue their underperformance.
02:40Is that also your read of the situation?
02:43Well, we do think that, you know,
02:45the earnings picture is very, very solid, not only in the US.
02:48We see inflation going down.
02:50This is a very bullish backdrop for stocks.
02:54Having said that...
02:55We see more potential outside of the US because this is where I think there are more...
03:00upside risks, I do believe, and I do believe also that when we look...
03:05at the tech sector again, yes, the temptation is always to say, well, this is a bubble.
03:10But the reality is that all these companies are still making a lot of money.
03:15And we are just at the beginning of a significant long-term upcycle.
03:19So I do believe that...
03:20the risk here is to sell too early, and we do believe that fundamental remains strong.
03:25for the tech sectors, even if we prefer to be invested more in other sectors.
03:30because we do believe that the value sectors will continue to perform.
03:35And value sectors in which markets are we talking about?
03:40Because, of course, when we talk about tech, it's not only about US tech that has seen that...
03:45significant rise.
03:46We're also talking about Chinese tech, which has seen significant interest.
03:50in recent months, could we see some value sectors in that market, for example?
03:55when the broader economy still remains pretty lackluster?
04:00Absolutely.
04:01We don't think that the best way to play this tech or AI...
04:05cycle is just investing in US tech stocks.
04:07I think we want to invest in...
04:10in Asia, not only there are even some potential interest names in Europe and Japan.
04:15So we want to broaden out the team, and I do believe, though, that the general trend is up.
04:20And there is no question that in some parts of the market, the Chinese players are incredibly...
04:25strong, innovative, and also cheaper than their US peers.
04:30Luca, are you seeing the events so far in January, whether it's Venezuela...
04:35Greenland, Iran to some extent, now these tariff threats, is that...
04:40China is also driving more towards Chinese assets.
04:45I think so.
04:46In a way, what we are experiencing here, what we've seen this before in a way...
04:50the US playing our ball here, with tariff threats and all the other things...
04:54the reality...
04:55China in this environment seems to be almost like a safe haven...
05:00I think it's important to highlight that China seems to be an era of stability...
05:05against, let's say, the West, especially the US, where there are these constant threats...
05:10riots and all these kind of things.
05:11So I do believe that there is some truth in the idea that the China...
05:15Chinese market in this very volatile environment, politically volatile environment, geopolitical...
05:20the Chinese stock market seems to be relatively a safer...
05:25option than other markets.
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