00:00But there's been this huge sell-off of Asian assets since the Middle East conflict began.
00:05Why are investors pulling money out of Asia?
00:08Well, it's not complicated.
00:10Asia is more severely impacted by the loss of flows of oil and LNG from the Gulf states,
00:21more than maybe the Western European countries and definitely more than the United States.
00:26So, naturally, there's anxiety about their vulnerability in that respect.
00:32Foreign investors have sold around $50 billion worth of regional equities this month.
00:37Which markets would you pinpoint as being most at risk?
00:41So, most at risk, I think, is Japan and then the South Korea.
00:47India is third and China is fourth, I would say.
00:51But, you know, these markets are making, these governments are making provision.
00:57These governments are responding, in my view, in very sensible ways to this, to, A, draw down on stockpiles.
01:04And in the case of India, for example, they're limiting speculation on their currency in relation to deliverables,
01:16onshore deliverables in India.
01:18So, you know, governments are reacting and trying to manage this, a bigger part.
01:23You mentioned China at number four, but I've noticed that Chinese government bonds are performing well.
01:29And some analysts are saying, look, you know, China, it could be a safe haven.
01:33What's your take?
01:34So, I absolutely think so.
01:37I also think that China ought to be a world leader here.
01:40And it's very clear, as Professor Adam Tooth has argued in the Financial Times today,
01:46that China is one of the few, is perhaps the only adult in the global room at the moment.
01:51And in my view, A, you know, China has stockpiles of oil and gas.
01:57And B, China's economy is doing really well.
02:00And secondly, China has access to US dollars, has good supplies of US dollars.
02:06So, China could play a leading role here and should, in my view, given her position in relation to these
02:14markets.
02:15So, if global uncertainty continues and the conflict in the Middle East rumbles on,
02:22can China realistically position itself as a long-term centre for investment?
02:27And what could stand in the way?
02:29So, at the moment, no, because the US dollar and the dollar, the reserve currency,
02:35is far too powerful and strong and capital markets far too deep.
02:40But China is edging on her way there.
02:43She's already shown with the introduction of a payment system in 2015,
02:49which has merged into the Enbridge payment system, which is now much more efficient for those who wish to exchange
02:57and use Chinese currency, yuan, than in the past.
03:02And so, gradually, China is tripping away at the edges of the dollar's reserve status.
03:08And I think that is a good thing.
03:10I think China should enter into a coalition with other BRICS countries to manage their trading arrangements in order to
03:19begin to limit dependence on the US dollar.
03:22At the moment, the reason capital flows are flooding out of Asia into the dollar is because, in the first
03:29place, the United States is well positioned.
03:31It is self-sufficient in oil and gas and has deep capital markets, as I've said.
03:38But the dollar has been weakening and countries have been beginning to opt out of the dollar when it comes
03:45to trade transactions.
03:47And although China only has about 8.5% at the moment operating through its payment system, 8.5%
03:57if you like, global trade transactions,
04:00nevertheless, she is beginning to take, as I say, to chip away at the role of the US dollar.
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