00:00If you take a look at the gap that we see in trading between Brent and WTI, clearly Asia is
00:05taking the brunt of that negative impact.
00:07Does that mean you're avoiding risk assets across this part of the region? What's your asset allocation looking like at
00:12the moment?
00:14So it's actually still a very complex situation to think through.
00:19I think that obviously when you have high oil prices, you mentioned Asia is at the forefront of probably feeling
00:28that earlier than the rest of the world.
00:31I think it's also at the point of feeling the potential growth stress earlier than the rest of the world.
00:37So policymakers here are really grappling with two almost simultaneous developments.
00:42But clearly the growth stress is coming through much faster than in prior sort of inflationary or stagflationary episodes.
00:51So I think that the next step to think through is actually fiscal policy and how much of room each
00:58country has to deal with or to at least buffer household when it comes to the impact of oil prices
01:04on consumer spending.
01:05And then potentially how much FX depreciation we have to give away when we utilize those fiscal levers or as
01:13we push them further in an already very constrained world.
01:17And then I think then we have to take then finally we can take stock of what the growth outlook
01:22is and what that means for asset class.
01:24I still do think that there is going to be a lot of policy responses on the fiscal side and
01:28maybe some management through the FX.
01:30That means that our outlook is more stagflationary, maybe with a higher tail of a more severe growth downturn.
01:38But our base case is still more stagflationary, which means that it's unfortunately still a market that you cannot afford
01:44to completely miss out on because there will be assets that perform in a stagflationary environment.
01:51And the other important thing I think when it comes to Asia growth is that we have secular growth in
01:56technology coming through as well.
01:58I think that's a very underappreciated growth driver at this point for markets as well.
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