Nomura APAC Equity Strategist Chetan Seth on Fed, China

The video discusses the impact of tapering on Asian equities, highlighting that the negative effects are expected to be short-lived due to already low valuations and significant foreign outflows. It also covers the gradual process of tapering and potential rate hikes, with inflation expected to be temporary. The regulatory environment in China poses challenges, but there are opportunities in sectors with policy tailwinds. Investors are rotating towards other Asian markets like Korea, India, and Indonesia, with a cautious short-term outlook on China but a constructive medium-term view.

What is one reason the negative impact on Asian equities is not expected to last?

• The Fed has not communicated its plans well.

• Foreign investors are increasing their positions.

• Asian equities have been outperforming significantly.

• Valuations are no longer super stressed.

How is the process of tapering expected to unfold according to the discussion?

• It will not happen until 2025.

• It will start with immediate rate hikes.

• It will be gradual and well-communicated.

• It will be aggressive and quick.

What is the expected timeline for rate hikes to begin?

• They are not expected in the foreseeable future.

• In the first half of next year.

• In the second half of next year.

• Starting 2023 onwards.

What is a major challenge when investing in Chinese sectors with policy tailwinds?

• They have no long-term growth potential.

• They are quite expensive.

• They are not affected by regulations.

• They are often undervalued.

What strategy is suggested for dealing with sectors facing policy headwinds in China?

• Avoid them completely.

• Invest only in sectors with policy tailwinds.

• Maintain a balanced portfolio with both types of sectors.

• Focus solely on short-term gains.

Which countries are seeing a rotation of investments away from China?

• Japan and South Korea

• Malaysia and Singapore

• India and Indonesia

• Vietnam and Thailand

What is a potential risk when investing in newly listed companies in emerging markets?

• They always provide immediate returns.

• They are guaranteed to be successful.

• Their valuations are often considered insane.

• They are immune to market fluctuations.