The Investor's Guide to Asia: Why Asia high yield is back

From Indian renewables operators to Bangkok banks, the Asia high yield market has moved on from China’s property sector problems, and annualised returns over the last three years are running in double digits. But what are the risks? Stuart Rumble and Taosha Wang talk to fund managers Tae Ho Ryu and Terrence Pang. We also hear from Fidelity Asia economist Peiqian Liu on the latest macro signals and portfolio manager Theresa Zhou on China’s stock market rally.See omnystudio.com/listener for privacy information.

Doubts over interest rates and the over-concentration of stock markets hint at a need for more robust, diversified portfolios going into the final months of 2025. Seb Morton-Clark and co-host Caroline Shaw assess the risks - and what we should be doing about them - with portfolio managers James Durance and Tristan Purcell.  With additional contributions from real estate credit analyst Othman El Iraki. See omnystudio.com/listener for privacy information.

Companies' spend into artificial intelligence has been immense. But we're yet to see the tangible output of that investment. Should investors care? Portfolio managers Rosanna Burcheri and (self-confessed AI sceptic) Dmitry Solomakhin, plus technology analyst Jonny Tseng, join Seb Morton-Clark to discuss their thinking around AI. Watch more from Jonny's research trip to Silicon Valley here. See omnystudio.com/listener for privacy information.

The Investor's Guide to China from Fidelity International takes you deep into the workings of the Chinese economy and its financial markets. Paras Anand, Chief Investment Officer for Asia Pacific, brings you a cast of investment experts working in the world's second largest economy. Hear how they're uncovering this rapidly developing market and avoiding its pitfalls. Episode 4: Environment. China holds a unique title as the most polluting and greenest nation on the planet. It generates more renewable energy than any other country but also builds the most coal-fired power plants. How should investors approach this dichotomy? And what does the country's commitment to peak carbon emissions by 2030 mean for markets? Talking with Paras are three China and sustainability experts: Belinda Liao, a portfolio manager with a focus on Chinese credit, Jenn-Hui Tann, Fidelity's Head of Sustainability, and Marty Dropkin, Global Head of Fixed Income Research. We also hear from equity analyst Alice Li about the state of China's third largest power source - wind energy - and portfolio manager Bertrand Lecourt explains the opportunities he sees in China's water and waste sector. Click here (or below on Apple podcasts) for more episodes from this series.See omnystudio.com/listener for privacy information.

The Investor's Guide to China from Fidelity International takes you deep into the workings of the Chinese economy and its financial markets. Paras Anand, Chief Investment Officer for Asia Pacific, brings you a cast of investment experts working in the world's second largest economy. Hear how they're uncovering this rapidly developing market and avoiding its pitfalls. Episode 3: Corporate governance. Trust in Chinese companies has always been a challenge for investors. As more of them list on global indices, management, disclosure, regulatory alignment, and state involvement are all coming into greater focus. The corporate landscape in China is maturing, and levels of transparency and accountability are improving. But investors are still working out how far corporate governance has come in the country and to what extent the trust gap is closing. Joining Paras for this episode are Anthony Bolton, former portfolio manager and now special adviser at Fidelity, and Shanghai-based portfolio managers Lynda Zhou on the equity side and Alvin Cheng for credit. We also hear from analyst Monica Li about her on-the-ground research into China's booming healthcare sector, and from Fidelity's Head of Sustainability, Jenn-Hui Tann, about the emergence of dual-class share listings on China's stock markets. Click here (or below on Apple podcasts) for more episodes from this series.See omnystudio.com/listener for privacy information.

The Investor's Guide to China from Fidelity International takes you deep into the workings of the Chinese economy and its financial markets. Paras Anand, Chief Investment Officer for Asia Pacific, brings you a cast of investment experts working in the world's second largest economy. Hear how they're uncovering this rapidly developing market and avoiding its pitfalls. Episode 2: Stock picking. China's businesses operate in a unique environment and understanding that matrix is imperative to those hoping to identify the best companies for investment. What are the most effective strategies for finding the winners and what are the warning signs of those to avoid? Joining Paras to take a closer look at China's equity market are Jing Ning, a senior portfolio manager at Fidelity with some 20 years experience investing in the country, and Casey McLean, an investment analyst with a focus on China's technology stocks. With additional contributions from portfolio manager Hyomi Jie and Fidelity's head of Asia trading, Kelly Clark. Click here (or below on Apple podcasts) for more episodes from this series.   Transcript Paras Anand Hello and welcome to The Investor’s Guide to China from Fidelity International. I'm Paras Anand, Head of Asset Management in Asia-Pacific, and each episode I'll be taking you deep into China's economy to find out what's driving the country, where the exciting opportunities are and perhaps areas where we should be a little bit more wary. Today: stock picking - the art and science of researching and understanding which companies to invest in, whether those be SOEs - state owned enterprises - or POEs - privately owned enterprises - acronyms you'll be getting very familiar with. China is in many ways still an emerging market and it comes with its own idiosyncrasies. But as markets continue to open up - and there's been big news just as we record this episode - China offers significant rewards if you have the right tools. And bringing their toolboxes with them today to join me in Hong Kong are two of Fidelity's China experts. First we have Jing Ning, one of our senior China equity portfolio managers. Jing you've been looking at this market for some 20 years. What's the biggest misconception that you tend to come across when people think about investing in China? Jing Ning Every year I meet probably dozens of investors, they’re very interested in investing in China and they want to know what's going on from the policy and consumption story and new technology in China. But with that being said I can't feel there’s always a wall of worry with China. Everyone is asking about: China has been growing their credit very rapidly in the past decade and when is it going to stop. They've been building the bridges and railways and infrastructure investment - when is it going to be stopped? And I think the more pessimistic question is always asking, when is the reckoning moment that's going to come? So there hasn't been a year - I can be very honest with you - there hasn't been a year, if I visit my investors globally in Europe and Asia, that they I haven't asked this question, right. So there’s always been this wall of worry on China. Paras With Jing is Casey McClean. Casey, you’re an investment analyst who's covered Asia Pac for almost two decades. The last 13 years you've been really focused on China. You've covered almost every sector during your career in the region. From an analyst’s perspective, what are the big changes that you've observed? Casey McLean I think the biggest changes specifically with China really is the composition of the market. I think if you look back 10, 15, 20 years ago it was dominated by industrials, materials, financials, property. China was back then really the outsourcing factory for the rest of the world. But if you look at the market composition now it's changed a lot. You’ve had the emergence of internet. There's a lot of consumer brands with their own genuine brand value in China. And there's more and more services being delivered in the market every day. I think what's changed is China's gone from a an industrial manufacturing centre to a place of genuine innovation. And that innovation is being rewarded in the market as well. Paras So let's dive into the topic of today's podcast which is stock picking. Jing, how do you go about stock picking and what makes your investment approach unique? Jing You know China's an emerging market. The market is quite chaotic. Everyday we're dealing with policy changes, new competition, and there's always new changes to business models. I think for investors in the China market you really have to know your company well and it takes years, sometimes it takes ages to know the company, especially [because] you know your company better in a downturn than in the good times. Sometimes I tell my investors, although there are so many noises flowing around in the China market every day the key is to build conviction and what comes with the conviction is to know your company really well. And that takes time. Paras And Casey, how do you distinguish a good company from a from a bad company in a market like China? Casey For me, the first point of my process when I'm looking at a company will be to screen out any bad actors by looking for stocks that are potentially accounting manipulators or have some bankruptcy risk or what not. But I try and look for companies that have a minimum level of quality. I'm not saying high quality, I'm saying a minimum level of quality - one that's able to earn a return on invested capital above its cost of capital across a full cycle. There's a lot of cyclical companies in China, especially within the tech sector which I'm looking at. So I don't worry about what they earn last year, I worry about what they're going to earn next year. And if you pick a stock at the right point of the earnings cycle you can be rewarded for that. Jing Yeah, I think another thing is that most people coming to China are looking for growth. They're looking for the next Alibaba, the next Tencent, and people are constantly looking for the next growth story. But Paras, as you know, I’m probably one of the very, very, few value investors in China and actually I think that value plays a very interesting angle in China. The value story in China is not dull at all, it’s quite interesting. For example, Casey and I, we looked at a company called Lenovo. It was two years back and at that time Lenovo didn’t fit into any definition of a growth company. But when we looked at it, it used to have a great company history and it got into temporary trouble and we believed that the company still had a decent chance to turn around and to be a growth company sometime, a couple of years later. Would you say Lenovo was a value stock or growth stock? I would say it’s a very interesting growth stock but with an extremely attractive valuation at that time we looked at it. Paras Was it hard to get excited about Lenovo, Casey, as a technology investor? Casey Lenovo is probably not quite at the leading edge of some of the technology companies that you can look at out there. But I agree with Jing, it was very attractive value. It was spinning off a lot of cash flow from its main division which was PCs and if you could get confidence in their mobile division - which has been loss making for a long time - if you got confidence in that turnaround story there was a lot of money to be made. And so you do need to have very high conviction in those turnaround situations. But doing a lot of work and sitting down with management - we had a full day with management and every head of every division - we were able to gain that conviction. And fortunately that division did turnaround quicker than the market was expecting and they've gone on to do better things. Paras Turning to Jing, you talked at the beginning about this ‘wall of worry’ that investors often climb and one of the things that's often reflected to me is that corporate governance is a huge area of concern. People worry about protection for minority shareholders being different to what you might see in other parts of the world, balance sheets, ownership structures can often be sort of convoluted. So how do we consider those risks. What do you consider when it comes to corporate governance? Jing You cannot invest in China without thinking about corporate governance risks, that’s for sure. But for me, I think about the issue as many different layers of grey rather than straight black and white. Because when I talk to many companies, and sometimes they do things I wouldn't like them to do like related party transactions and they do irrational acquisitions. We you ask them, ‘Why you are doing that? You’re destroying minority shareholder value. As a result, your market value has been going downhill. And the usual answer I get from them, amazingly, is, ‘We don't think it’s a big deal. Why do you think it’s a big deal?’ It’s all about corporate culture and the way they think about what is a right form of governance for the minority shareholders. I think Casey, you probably agree with me, that the active manager plays a role here? Casey Yeah, definitely I agree. I think there is perhaps a perception and a reality that the level of corporate governance in China is lower than in some of the developed markets. But what I try and focus on is the delta in that corporate governance. It's the improvements which drive better quality in the companies and potentially the re-ratings in stocks. And you've seen evidence of that over the last few years particularly among some of the bigger SOEs who have really improved their capital allocation and doing a lot less national interest investing. Paras And you've talked a lot about this idea of trust and building trust in companies. How do we do that? How, Jing, in your process do you go and build trust in companies and the management teams that run them? Jing For me, people are the number one top priority in any business you look at. So usually when we meet a new company, identify a new interesting investment idea, the first step is you go to meet with senior management - CEO and CFO - but I don't think the research work usually stops here. Usually we'll try to meet further staff to try to meet the middle layer of the management - we want to meet the head of sales, the head of marketing, the head of PR and to understand the culture. But that takes time. Casey That's right. I think increasingly over the last few years we've been engaging, collaborating with companies a lot more and they're a lot more open to these discussions, dialogues, two-way streets here. We're not an activist investor in any way but we're trying to work together to generate better shareholder value. Paras So you actually feel your voice is being heard. When you go and see these companies and you engage with them, you feel that even as a minority shareholder your voice is heard and listened to. Jing Yes, sometimes. Every year we try to identify some companies and we send angry letters, we call them angry letters - just basically complaining about something that they have done, not taking care of the interests of minority shareholders. Sometimes they don't pay us dividend and sometimes we think they should do more. In the beginning most of our letters get ignored and we get no consequence whatsoever but gradually, very interestingly, and I think Casey would agree with me in the case of Sinopec, we sent a letter to them, to the board, asking for a sustainable dividend payout policy and they actually responded to us and said they would seriously take a look at our proposal. I'm not anticipating any fireworks coming at the end of the day, they're going to change their behaviour overnight, but that's a very encouraging development I would say. Paras And looking at the composition of the market, they're obviously state-owned enterprises as well as private companies. Casey, should investors approach those differently? Casey Not necessarily. At the end of the day you're just trying to find a company that's going to deliver a good return. But I think there's different risks that you need to be aware of when you're looking at those two different groups of companies. In private companies the potential for fraud, accounting manipulation, those things are probably higher. And they're also smaller, more nimble companies. They can move fast - they can break things though at the same time. Whereas you look at some of the SOEs, they're larger companies, they move more slowly. And I guess the biggest risk with those is that they have to undertake national interests and support the Chinese economy and other companies. Jing I think that basically what Casey is saying is there's always two sides of the same coin. SOEs - they’re taking the state support but on the other hand they will of course take on social responsibility, and private companies, they’re very nimble and very flexible but on the other hand they have a very strong incentive to do well and of course they will have incentive to cheat you to maximise their shareholder value. Casey But there can also be a valuation disconnect. Often the SOEs trade at a big discount to the private companies. And like we say, if you see this delta, the improvement in corporate governance or their earnings profile, that can be a great opportunity especially for a value investor like Jing. Paras So it really seems that it's all about making sure that you understand the individual company and doing the on-the-ground research. Jing Yes. Casey Yeah, that’s right. Paras Well, on the subject of on-the-ground research we spoke earlier to another one of our portfolio managers, Hyomi Jie. Our Asia Editor, Neil Gough, caught up with her for some window shopping in Shanghai to hear about her approach to consumer stocks and in particular how the trend of premiumisation is playing into her investment thinking. Neil Gough I'm standing here at a sprawling hypermarket in Shanghai with the Hyomi Jie, a portfolio manager at Fidelity International who focuses on China's consumer sector. We're at RT Mart in Yangpu, a mainly residential district a few kilometres north of Shanghai's historic riverfront Bund. It's a typical weekday morning in the summer and the store is busy with all kinds of shoppers from across generations. They're picking over produce, looking for bargains, stocking up on bulk items like rice. And this is a retail supercentre. They sell everything from leather shoes to air conditioners to live lobsters. Hyomi, you actively stock pick within China's retail sector and I'd mentioned to you previously that I was interested in seeing how you carry out research on the ground and I assume that's why you brought me here today? Is that right? Hyomi Jie Yes. Yes exactly. You come to this store and you see what kind of consumers are coming to the store and what kind of things they're buying, in which aisles they're spending more time. So that helps me to gain a bit more insight into what kind of brands are gaining traction and what kind of products are gaining interest from the everyday consumer. Neil One of the trends across the consumer space that we talked about before was premiumisation and how customers are upgrading their purchases across a whole bunch of different categories. How does that play out in an environment like this, in a supermarket? Hyomi Premiumisation is a trend that's going on across all the sectors in consumer, I should say. It's really driven by the growing income of Chinese consumers and expanding middle class and their desire to want and aim for higher quality products. And in a supermarket environment you can see that people will choose higher quality, higher price items within the same brands, or they might move up to the perceived higher-end brands. But also within the fresh produce that is happening as well. If you see that in the traditional supermarkets you can see the piles of meat products in the very typical Chinese supermarkets. Neil And some in front of us here today. I see the butcher swinging his cleaver here in the background. Hyomi That’s right, that's very normal and that's still the majority. But you can see in a small section, which is expanding, you can see that there’s branded pork, branded beef, and it is packaging in a small format that's suitable for a single households and younger generation who don't want to spend too much time cutting and cooking. Neil So individually wrapped in plastic as opposed to a giant slab of ribs or something like that. Hyomi Indeed. The per unit price should be higher by easily 20-30 per cent but from consumers’ perspective maybe you can actually save food by not buying too much at once. Also it's much easier for you to prepare your food. Neil So you're paying more per unit but you're probably wasting less on the whole. What does it mean for a company at the bottom line level? Are you seeing that feed through in revenue and in sales? Hyomi It's still a small portion of their revenue but the companies who can take advantage of this kind of trend with better marketing and better merchandise will obviously be able to attract more customers to lead to better revenue and at the product level, at the unit level, they should be able to generate better returns and better margins. Neil Beyond supermarkets, when you look across retail, what other areas are you seeing premiumisation playing out? What are some of the other sectors? Hyomi I should say that in services the premiumisation is also happening. The overseas travel has been growing faster than domestic travel in a very consistent way for the past few years. And that’s shown in the duty-free stores’ revenue growth trends in the past few years. Neil And then when you're not running around the aisles of supermarkets like these what are some of the other things you're doing on the ground to carry out research when you're coming to China? Because I know you do travel here quite often. Hyomi When I come to China I try to spend my time here as much as like locals. So, I take Didi and go to other department stores or I go to meet my friends and on the way I get to see many different things like what's happening, what's changing. Also, the payment pattern is definitely changing in China. So, it is indeed a cash free economy at the moment. You really need to pay for things with Alipay or Tenpay. Another thing that I have been doing for more in-depth research is to spend a couple weeks with a Chinese family doing homestays. So last year I spent two weeks in Shenzhen with a Chinese family of four members where I could learn about their consumption behaviour, their aspirations, what they care about for their children and their parents and their wealth creation, all these things. Soon I'm going to go to Chengdu and will spend another two weeks with a Chinese family over there. Neil Thanks Hyomi. That's a really interesting look at how stock pickers are doing their research on the ground in China. Paras So Jing, Hyomi paints a rich picture there. She's spending time in the new engine room of the Chinese economy as we can hear, in these shopping malls and spending time with families, really going in deep to help her understand the country's changing consumer trends. But stepping back a little bit, what about the equity markets more broadly. How have they been developing? Jing I think there is a key element currently missing from the whole story which I think is very important going forward which is the income element in China. The income story globally has been a very popular strategy but very few people associate China with the income element because people come here looking for the growth story, they’re not looking for the dividend story. But China is actually changing into a very interesting income story. We're not growing 10 per cent every year, right? This year we're going six, next year we’ll probably be growing at five or something. But for corporates they’re free cash flow is improving and with cash coming in they now have an opportunity to think about another capital allocation perspective which is paying dividends. Paras I mean when I think back to some of the changes we saw in the European market, so going back 10, 15, 20 years ago, companies were prevented from paying dividends because boards would often think that you were taking money out of the out of the pockets of the employees and giving it to shareholders. But I've always thought that there's an association with companies paying dividends and treating minority shareholders well with a maturity of an investment market. So, Casey is this good news from an analyst’s perspective? Casey Yeah, it definitely is Paras. I think the thought process for some of the Chinese companies in years gone by was that dividends were simply paying money out of the company away to foreigners. That's gradually changing and I think there's a recognition that the capital structure is more important. And they have made some significant progress. It's been helped by the government: SOEs are now mandated to pay out 30 per cent of their earnings. And I think if you look at the market as a whole I think it trades on about a 2.5 to 3 per cent dividend yield, which is actually higher than the US, the S&P 500. So, it's still got a long way to go but they've definitely made some significant progress.  Paras And of course it's such a strong signal of the continuing evolution of these markets. As I mentioned earlier in the introduction there's another significant development, which is that the Chinese regulators have dropped quotas for foreign institutional investors, or QFII. This is a really big deal, isn't it Jing? Jing It is. It is indeed a very big deal. That means that the market will in some way become open access for everyone. You don't need a quota to buy China A shares. That actually brings a sweet memory for me. I remember back in 2004 I was at the door of CSRC [China Securities Regulation Commission] applying for the QFII license and applying for the QFII quota and we got thrilled when the regulator awarded us $50 million QFII quota. And we thought that was quite an achievement back in 2004. And now, 15 years later on you don't need a quota to buy China A shares - very exciting as well. So, I think that with the years it’s moved along, and without a quota or any kind of restriction tacked on to it that just means that the market becomes a very friendly, even playing field everybody.  Casey Yeah, I remember I had a similar circumstance about 10 years ago, as well. I remember applying for an additional QFII quota and the process was very laborious, very bureaucratic. It was almost government-to-government-style negotiations and removing that sort of hindrance to foreign investors is a huge plus for the opening up of the China markets.  Paras And obviously when we think as investors we're always thinking about investing for the long term and there's a difference that often people think about between long term investing and and then thinking about the market in China which they see as being very volatile and retail driven. Do you think that there is an opportunity reframe the investing proposition for those domestic savers? Casey Yeah, I think it's a gradual process. But all of these measures that the government’s instituted to get foreign investors, foreign institutions investing into China means that they're less driven by speculation, they become less short term, the market becomes much more fundamental-based. And I think if you have a long history of following those fundamentals you’ll have a big advantage in the A share market as it develops.  Paras So what exactly do recalibrations like these mean on a practical level in terms of trading with and inside the country? Investment director Catherine Yeung spoke to Fidelity's head of trading in Asia, Kelly Clark, to find out. And a short caveat before we hear the interview: this conversation was recorded before the latest announcements around the scrapping of the QFII quotas.  Catherine Yeung We've seen a whirlwind of changes relating to access and regulation for trading when it comes to the Chinese markets. Volumes have skyrocketed but there's still a number of hurdles to navigate. I'm with Kelly Clark, Fidelity's head of Asian equity trading, based here in Hong Kong. Kelly, you've been in the market now for eight years. Can you share some of the biggest changes you've seen over this period? Kelly Clark Sure. For starters, when I first started trading the only way to access China was through QFII. And I was actually at a hedge fund at the time so the only way we could do that was synthetically, which made it very difficult and very expensive to actually access the market. So, I would say the biggest change in my tenure has been Stock Connect, which went live in 2014 and that was far more affordable to reach. You didn't have the issues with putting cash upfront or with repatriating cash back out of China. So it made it much more palatable to invest in. That also piqued the interest of the MSCI and FTSE and why you have the interest I think you have in it now. Catherine So, in layman's terms, Kel, what's the key differences between QFII and Stock Connect, especially from a trading perspective? Kelly You've got the ability to trade with different counter parties, again you can move cash more freely, it's a lot more familiar and the counter parties that you’re trading with as well. It was just a lot easier to access and open accounts. Catherine With QFII? Kelly So QFII still has its advantages. You can trade during Hong Kong holidays, which you can't do through Connect. You can also invest in the full universe of stocks versus the limited amount that you have in Connect, which is about 1200. The bigger one being now that it's the only way that foreigners can access the Star IPO Board. Catherine Yes, the Star IPO Board, I'm glad you mentioned this - so this is a science and technology exchange similar to Nasdaq? Kelly Correct. So I think the driver of this, as you mentioned, was for the Nasdaq. So for new sort of unicorn tech type companies to come to market within China. Catherine So we are seeing more foreigners - whether it's institutional money, retail money - going into the market. This is obviously being driven a lot by the Chinese government's policies to open up the capital markets, both equities and fixed income. So when we have the second largest economy in the world, a government who's very pro opening up the capital markets, can you please put into perspective just how big China is? Kelly So China actually represents 70 per cent of all of the turnover in equity in Asia. Catherine If we're seeing all this turnover, is it an easy market to trade? Kelly It's a liquid market to trade. I wouldn't qualify it as easy because it's actually still very volatile considering you've got the retail investor base that you do. I think there's still a few hurdles in getting more foreign investment into China. One of them being access to hedging instruments, so futures would be the main one there that everybody's looking for as a way to hedge out their index risk. So, there are there steps that the government's taking there or that the exchanges are taking there too in sourcing solutions for that issue. There's also a number of nuances still around settlement cycles, funding, broker settlements, but again they're pretty small nuances and the government is focused on getting those looked at. Catherine Kelly, thanks so much for your time. I mean it's a fascinating market to trade and to watch the developments in terms of the progress. Paras, that's all from us here on the trading floor in Hong Kong. Paras So Casey, with your tech focus on China what do you make of the launch of the Star Board that Kelly just mentioned? Casey Yeah, the Star Board is a really interesting development. It's another one of these baby steps to opening up and broadening the Chinese markets. But I think the fact that it's a registration rather than approval structure to list a company there is is quite important. It means that these loss-making companies, these high-tech companies which are innovating, can list and it gives them a new source of funding. I think from then from investor point of view it also opens up the opportunities to some of these smaller innovative companies that were probably only available to PE or VC type investors previously.  Paras And Jing, you’re a self-proclaimed value investor. Have you been looking at technology stocks at all recently? Jing Of course. Actually, last year a very decent amount of my time was looking at the technology sector, in particular in the context of the trade war between the US and China. A lot of technology stocks were falling victim because of that and valuation for some of them looks really, really compelling even from the perspective of a value investor.  Paras Trade wars was one of those things that we talked about on the last episode and we made a call that it would be not a short-lived phenomenon and so it's proved. But for a stock picker such as yourself, Casey, how do you deal with a backdrop of trade wars when you're trying to find individual opportunities.  Casey Like Jing says, the tech sector really has been in the crosshairs of the trade war and the volatility that that's brought has made it quite difficult, especially when the sentiment of the market can turn on a dime after just a single tweet. But having said that, it did introduce some value into the sector and there have been buying opportunities. And if you focus more on the longer-term trends there is an opportunity for Chinese companies to become more self-sufficient in some of the tech areas, take some revenue, some business opportunities off the US companies. And so I am increasingly looking for those opportunities on a long term basis.  Jing I think like the Chinese always say, every crisis comes with an opportunity. So when we think about a trade war of course the relationship between these two countries - I think, in my personal view - is fundamentally changed going forward. But that actually leaves an opportunity for China to rethink its supply chain. They want to reduce their dependence of some of their key supply chain components to external parties and they want to rebuild some of the supply chain companies. And, of course, they want to build a domestic economy to fend off any uncertainty coming from global trade. And I'm hoping that this trade war will push policymakers to really seriously think about market reform because when one door is closed you want to open the other window.  Paras So it really sounds like when we come to think about China from a stock picking perspective that despite all of the development of the market, all of the maturity and some really key changes that we've talked about with respect to companies looking at returns to minority shareholders, actually there's no shortcut to doing your homework properly.  Jing Of course. For me, I have been investing in China for the past 15 years. That market for me today versus 15 years ago is equally challenging, equally new, and equally interesting. It’s just like a brand new market.  Casey Yeah, I don't I don't think there's any substitute for boots on the ground and kicking tyres. Paras Great. Well that brings us to the end of our show today. Thank you to my studio guests Jing Ning and Casey McClean, and to our other contributors: Hyomi Jie and Kelly Clark with Catherine Yeung. And thank you for listening. If you like what you've heard then please rate and review us on your podcast app, we really appreciate it. And if you want to read more of what's been covered today then please go to our website. Our producers were Seb Morton-Clark and Neil Gough and our editor is Richard Edgar. Until next time, from Fidelity's Hong Kong studios, goodbye.  See omnystudio.com/listener for privacy information.

The Investor's Guide to China from Fidelity International takes you deep into the workings of the Chinese economy and its financial markets. Paras Anand, Chief Investment Officer for Asia Pacific, brings you a cast of investment experts working in the world's second largest economy. Hear how they're uncovering this rapidly developing market and avoiding its pitfalls. Episode 1: It’s an historic time for China's capital markets. Company shares and bonds have are drawing international attention after being included on global indices for the first time. But how open is China really to investors? Exactly how far down the road to liberalisation does China stand today and what should investors watch for next? Joining Paras to answer these questions are Lynda Zhou, a Portfolio Manager based in Shanghai, Bryan Collins, Portfolio Manager and Head of Fidelity's Asia fixed income team, and George Efstathopoulos, Portfolio Manager in the Asia multi asset team. With additional contributions from Alex Zhang, Investment Analyst. Click here (or below on Apple podcasts) for more episodes from this series.   ---- Transcript PARAS ANAND This is An Investor's Guide to China, a new podcast from Fidelity International. I'm Paras Anand, Head of Asset Management in Asia Pacific and I'll be taking you deep into China's economy. What makes the country tick, the areas that are most exciting, and the ones to avoid. Fidelity has built up decades of experience in China and each episode I'll bring you Fidelity's portfolio managers, research analysts, and other specialists who cover the market and can share with you their expertise. The past year has been historic for Chinese capital markets. Company shares and bonds have stepped into the international spotlight, included on global indices for the first time. But how open is China really to investors? Exactly how far down the road of liberalisation does China stand today and what should investors watch for next? To help me answer these questions I'm joined by three of Fidelity's China experts. With me in Shanghai is Lynda Zhou, a portfolio manager who's based in the city. Lynda, you're based here but how long have you known Shanghai?    LYNDA ZHOU I'm actually Shanghainese. I was born and brought up here but I went to Hong Kong to study and further work. And then the last year, it's basically the opening up of the China market that bought me back. So I relocated the whole family back to Shanghai after almost 20 years.   PARAS And joining us from Hong Kong we have Bryan Collins, a portfolio manager and head of our Asia fixed income team. Brian, how much does China figure in your Asia portfolios?   BRYAN COLLINS China's a significant part of our portfolios directly and indirectly. But you could easily account for half of the exposures that we have and growing. frankly. And, of course, indirectly China has a significant influence on Asia, less the rest of the world.   PARAS And also in Hong Kong we have George Efstathopoulos, a portfolio manager in the multi asset team. George, how close are you to the Chinese market?   GEORGE EFSTATHOPOULOS  In recent years we have found ourselves increasingly participating in China across the cap structure whether it is China bonds - sort of CGBs - sort of the saver part of the cap structure. Increasingly, the past year or so, in China high yield and more recently in Chinese equities, as well. So particular important for us in recent years.   PARAS Thanks George. And thank you all for joining me today. Lynda, Fidelity’s been in China for a decade and a half and you can see that the Shanghai skyline has changed beyond all recognition in that time. But what about the country's financial markets. Where are we in that journey?   LYNDA That's actually a very interesting question for now because we all know that China is still a relatively closed up market. You know we have the capital account is still pretty much closed. The financial markets, just in the past two to three years, the opening up happening… what is really encouraging is in the past one year we do see that speed of opening up actually accelerating quite a lot. It’s probably because it's one of the negotiation conditions of the trade war but we're still very happy to see that process.   PARAS And Brian and George you’re both very frequent visitors to China. But from your vantage point in Hong Kong what's your take on the pace of change? Bryan?   BRYAN I would say it's a little mixed. I mean it's very rapid. I very much look at the domestic capital markets in China and see them as not developed but rapidly developing. So in some respects the rate of growth - the size of the market, for one - has been impressive, immense. We've never seen this before in terms of the growth of a debt capital market or a capital market more generally. The good thing for China is that it's got large established developed markets around the rest of the world which it can effectively mirror or at least reflect or take the best of, if you will. We've seen some good improvements with the regulatory oversight especially around the banking system and around regulating shadow banking, for example, and shadow financing channels over the last couple of years in particular. Yet on the other hand there are some aspects, little things, which still have a long way to go. One of the obvious ones that we feel is significant for the onshore domestic bond markets is simply allowing greater use of really basic derivatives like bond futures, government bond futures, for example, which are available and they're used, but for example as international participants we're not yet able to use that as some other participants. Now we feel that that will change and will obviously continue to develop and there's always this balance between making sure that the development of any capital market is measured, it's controlled, it's not excessive or creating any kind of systemic risks. But on the other hand, given the size, the fact that the bond markets is 13 or so trillion US dollars in size, we expect within the next five to six years that number to be easily 30 trillion US dollars in size - that's as big as the US debt capital markets. So if you think about it in size terms they're going to equate each other very soon but when you think about the depth and breadth and the sophistication of the two markets, China's well behind. So it's got lots of room and opportunity to continue to grow.   PARAS And we're seeing that same sort of development also in terms of the A--share market as well when we think about index inclusion. George, when I look at the Chinese market, despite the sort of the development of it the depth of it liquidity of the market the volatility of the market still gives me the impression that it's still a very immature or sort of developing market. What's your perspective on that?   GEORGE I think it is a more retail-driven market. So retail investors onshore in China, they're responsible for roughly about 80 per cent of trading activity, of turnover, when they hold about 20 per cent of the outstanding. These numbers are slowly changing with the inclusion that we saw we are seeing a little bit of those dynamics change, it's still very early days. I think about 10 per cent now of the outstanding is held by foreign investors so this will gradually change dynamics and will have a positive impact on volatility. But having said that, I'd also like to mention inclusion. Typically what happens when a country gets included in an index you tend to have the ‘buy the rumour, sell the fact’, that's what happened with UAE, Qatar, and even going back with Taiwan and Korea many years ago. And this time around, with China, it's been the exact opposite. We knew there was going to be inclusion sometime earlier this year - we didn't particularly know the extent of it - but last year, despite decent earnings growth in China, we saw a huge compression of multiples. So we didn't really see this buying the rumour, selling the fact, that then created a very interesting buying opportunity on the back of very attractive valuations.   LYNDA After the valuation compression of last year the market is definitely becoming more interesting. And last year it was because we got multiple surprises from both inside and outside. I think the outside one - the trade war one - is probably still going on, but inside-wise the financial market deleverage has almost come to the end. So it does look more interesting from now.   PARAS And let's stay with trade wars for a bit. Obviously we're in this environment now, tariffs being imposed by the US on China and the retaliation that we're seeing. George, how serious is this and how much of an impact is it having on your asset allocation views, as you’re thinking through the portfolio. Is this a short term situation or something that you see extending for quarters ahead of us?   GEORGE The key thing that we're monitoring on trade wars is: what is the impact on the Chinese economy? And from our perspective we've done a lot of work trying to understand from the bottom up what does it really mean and the impact it has and today versus 10, 15 years ago, the impact today is very different because today the Chinese economy has managed to transition from an export driven economy to one [where] a big part of GDP growth is driven by the consumption story. So trade wars 15 years ago would have had a much bigger impact than what it has today.   PARAS I'd like to I'd like to come in on currency though because I think one of the things that I'm finding particularly surprising is how weak the currency was as we went through 2018. But despite all of these headlines around trade wars, when you actually look at the currency, yes - we see a little bit of weakness but really it's been more resilient maybe than one might have expected as we look through 2019. Bryan are you seeing value in the currency or do you feel that there's further weakness to come?   BRYAN The RMB is an evolving currency. For all intents and purposes it's a managed trade-weighted currency. And especially you can start to see how domestic monetary policy in China is playing a bigger role in the direction of the currency. So you mentioned that it was weak during 2018 which was the reverse of 2017 versus the US dollar because monetary policy growth trajectories are actually diverging, so that's what currencies should do. In 2018 the PBOC was easing monetary policy, the US Fed was actually starting to hike. Growth trajectories between the two were actually starting to diverge: the US was stronger, China was starting to moderate. So you should see a currency behave that way, like a natural stabilizer. That's what they do. That's one of the great things about having a currency.   PARAS But I want to bring out this point on value though. Lynda, when you look at the currency do you see value?   LYNDA It’s a tough question because as an as an insider people are always trying to diversify because we see the credit expansion speed - it's so much faster than your nominal GDP growth. That's why internal-wise, domestic people always have a fear of the currency depreciating, that's why they're willing to put money into things like property or even hard liquor. But just not keep cash.   PARAS But in the context, George, of your portfolios you can be hedging out currency. Are you hedging the currency at the moment?   GEORGE We have been hedging the currency for the past month or so. I'd say roughly two weeks before the trade war shenanigans came back to surface. And the reason for that is we thought that the currency had gone a long way so far this year, it was pricing in a lot of good news. The hedging cost as a result had come down quite significantly. Last year, hedging cost we're about three and a half to four per cent - almost the entire coupon you'd be getting from the bonds. On the other hand, a month ago they had gone down two basis points. So from our end, pricing was very good news and hedging costs were very low, we thought that was a good opportunity to reduce some of our renminbi exposure.   BRYAN The interest rate differentials have completely converged between China and the US. So those hedging costs are negligible now. I wouldn't say there's value in the currency only because there are downside risks. There are psychological barriers if you will, particularly for the domestic consumer and domestic confidence that seven is an issue. But frankly it should be able to break through that. If China needs to be able to adjust to a relatively high level of debt to GDP, if it needs to use that as a tool within the trade war negotiations, maybe, but currencies need to go up and down to be a natural stabiliser and the problem is with a closed capital account, with a managed currency, its ability to do that has both very strong pros and cons.   PARAS Just turning to the economy more broadly. One of the things that international investors really struggle with, Lynda, is actually trying to get a read on the Chinese economy. From inside the country, what's your view on where we are in the business cycle? How do you get a read on the economy?   LYNDA It's also not very easy even for a domestic person because the volatility in the GDP number is very low and to some extent doesn't really reflect how the economy changes. So we do have some better indicators, things like power generation and things like discretionary spending on some of the key items. I think these are more close to the reality, [these] types of parameters. And also I have some personal channels.   PARAS Tell me?   LYNDA I’m based in Shanghai so I take taxis - [it’s a] shared car system - twice a twice a day.   PARAS So you take taxis twice a day?   LYNDA Yeah. It’s actually quite good value because we still got a lot of internet giant subsidies on shared car services. So I talk to the drivers twice a day. The interesting thing is these taxi drivers, they are not full time taxi drivers, most of time they have another job and [often] they're actually SME owners. So in their leisure time they can earn some additional money.   PARAS SMEs - small companies?   LYNDA Small medium enterprises. They can give you really first hand information of what's happening on the ground. Like, for example, one of the drivers last year, he raised pigs. He told me it was very tough last year, in his business. And he was thinking that he may close down his business and switch to another one. That's typically a signal of the trough of the cycle of the pig market.   PARAS And how did you act on that? What did you do on the back of that information?   LYNDA Usually it will give you some idea of a kind of turning point and also it just gives you an idea. So after that I need to prove that. So I talked to the really big scale pig raising companies to see if it's really close to the downcycle of the market. I think that probably gives me some of the information earlier, you know quicker, before I really picked up some news from Bloomberg or from a sell-side report. It's really first-hand information.   PARAS One of the things that I'm really interested in at the moment is the role that monetary policy is playing. Bryan, I don't know how effective you think the Chinese authorities have been in terms of their use of monetary policy to manage the economy? Should the folks at the People's Bank of China - should they be talking to the pig farmers as well?   BRYAN For what it's worth I'm certain they are because that's an important component of inflation. Food in particular is a big part of the consumer price index and it's just a big part of the disposable income. And I think what we've noticed with the PBOC is that their monetary policy framework, their formalised open market operations, have really stepped up quite meaningfully in the last couple of years - officially from November of 2015. So monetary policy is now becoming a much better tool and you can monitor that through, again, the formal open market operations, you can look at it with short end funding costs. So this is actually a much better indicator, we would say, of what the central bank is actually doing rather than just what they're saying. And so you can actually start to see over the last couple of years that tightening of monetary policy. The easing of monetary policy over 2017 and ‘18 respectively were very clear to see and that helped us with our positioning, it helped us get conviction, it helped us to add risk at the end of last year. And the other thing that I think is very relevant to that - it's all very interconnected as you can imagine - is obviously the currency and interest rate differentials (we talked about that before). But then it's even just looking at the credit impulse, that credit growth within the economy. This is critical in assessing and evaluating the cycles and the mini cycles that we see within China, all very related to each other, because monetary policy is not just credit growth, we also need to add things like fiscal impulse or local government spending, for example.   PARAS And if we turn to macro prudential measures more broadly. George, again, to ask the same question: despite lots of different economies and governments talking about macro prudential measures, you could argue actually that China's been one of the most effective at using macro prudential measures to control the economy. Am I right in thinking that?   GEORGE Last year we have had the deleveraging campaign and that has been working but at the same time it has also had some unintended consequences. And actually that links up very much to what Bryan talked about - the credit cycle and the credit impulse. What happened last year was that companies that needed liquidity, that needed credit flow the most, these sort of private companies, small and medium sized enterprises - these companies did not have access anymore to lending. And as a result we started seeing an increase of defaults, more spread volatility in the onshore bond market, and that's important because small and medium sized enterprises in China, private companies in China, they make up a big part of China's employment - about 70 to 80 per cent of urban employment. And if we think of China and the political spectrum in China, they key objective here is, I would say, social stability. How can we relate that to the economy and something more tangible that we can monitor? I would argue that that is employment, essentially not seeing unemployment rising. If private companies are having issues - and not issues because they've been poorly managed but issues because they're not finding access to liquidity - then that is a bad thing because it can lead to rising unemployment. Now that was identified as an unintended consequence by the PBOC middle of last year, they started stepping up on that front. And as a result, from our perspective, that was a catalyst to start adding to risk especially in Chinese corporates.   BRYAN The macro prudential policy that we've also seen, which I think is a little bit mixed but I think you're right Paras, it's been a pretty good example of how it can work, certainly at scale, that's for sure. Clearly, we've seen over many years quite extensive policy controls around the property market, around lending standards, that's actually created some distortions frankly, it’s a mixed result if you will. The other macro prudential policy - it's probably torturing and stretching the term and the definition a little bit - has just really been about the cost of funding. So the overall cost of funding, the allocation of capital within the economy, has been very heavily skewed towards state owned enterprise and with good cause - through decades of rapid development this is a necessary, very valid way to create capital, to generate fixed asset investment, infrastructure and everything that goes with it. The problem however is over time, if the cost of capital is not priced correctly you then get a misallocation of capital. And one of the nice things that we see about the development of a domestic bond market is that it starts the process of pricing capital better. And when you price capital better you get a much higher chance of that capital being allocated more efficiently. It's not perfect. It just means that good quality companies get rewarded with a lower cost of funding and vice versa. It's a work in progress. The bond market helps you do that. But that's, I would argue, the number one financial market reform for China: the efficient pricing and allocation of capital, and the bond market helps with that but there's still a lot more to be done.   GEORGE And not just the bond market, also the inclusion of China into the Barclays indices etc which will slowly find international institutional investors coming into the market and again helping with pricing that risk more efficiently.   LYNDA Just on that misallocation of capital point: this round of easing I got a very different feeling because from the recent April PBOC monthly commentary you already feel that they started to tighten a little bit after the first big scale of easing. So this time round their mentality is very different. They want to just control the liquidity enough to support the economy, not [let it] collapse, but they don't want to really pump the system with abandoned liquidity and create a lot of bubbles or in another words, allocate capital in a very inefficient way. So I think it's also a kind of mentality, an attitude change towards the easing and definitely that brings more credit financing to direct equity financing or bond financing.   PARAS And Bryan you mentioned property and traditionally property is where up to 70 per cent of Chinese household wealth is tied up. And my colleague Richard Edgar has hit the streets in Shanghai to see what's happening in the property market and what that could actually mean for the broader economy.   -----   RICHARD EDGAR Paras, I'm in downtown Shanghai, the centre of the Pudong business district, in fact just outside our offices. You can probably wave and I'd see you. But I'm about to go on a ramble to see some rather different areas, different neighbourhoods and the story they tell about China's economy today. My guide is Alex Zhang, Fidelity's real estate analyst here in China. Alex welcome to you.   ALEX ZHANG Welcome to Shanghai.   RICHARD Thank you very much. What an exciting time to be covering real estate. I know that you think that Shanghai is a little bit like China in miniature - if you could call a city like this of 26 million people in any way mini - but tell me about the development here in this business district, what are we looking at right now?   ALEX Sure. We are now standing in the very centre of Lujiazui financial town and there are around 40 buildings in this area and in those buildings we have over 200,000 people working for the financial industry.   RICHARD And 30 years ago what was here?   ALEX Fields and some very shabby neighbourhoods. And when the Chinese government decided to develop the Pudong area as the starting point of opening up we started to see a lot of building. Some of them were built in the 1990s but also some of them are what built in 2010.   RICHARD So this is possibly the scene that most people think of - most foreigners certainly think of - when they think of Shanghai. But you're going to take me to a rather different place.   ALEX Yes of course. For the residential community in this Lujiazui area there are two camps. One is about five to 10 minute walk from our office. And the other is around 20 minute walk from the office. I'm actually living in the 20 minute camp.   RICHARD It sounds like we've got some exercise to get on with, why don’t you lead on.   ALEX Yes, of course.   RICHARD Right, Alex, not an awful lot of exercise. We've only been walking about seven or eight minutes and here we are in the area that you were telling me about. It’s much more residential, it’s leafy - we've got lots of trees down this street, very attractive and helpful on a very sunny day here in Shanghai. Tell me about the shops that we can see around.   ALEX As you can see the most popular are property agents, restaurants, coffee bars, juice bars. And I think all of these represent the fast-growing service industry in China. So definitely it's a structural trend. However, we can also see with all of these tenants the turnover rate is very high.   RICHARD The turnover rate?   ALEX Yeah - or the churn rate, which means a lot of people are trying to open their own shops. However, some people succeed to survive but some people just have to close down just after the tenant lease period.   RICHARD This is your neighbourhood. You walk up and down the streets every day. How often do you see new shops here?   ALEX I have to say very often. Actually, in front of us these three shops, I didn't find them during the last weekend.   RICHARD Really? They’re brand new?   ALEX Yeah.   RICHARD And how long do you think they'll last?   ALEX It depends. I think the property agents probably could last quite a period because they are the experts about demand. And these dumpling shops, I think they mainly serve the mid to low end customers, they can actually also survive quite a long time. But this one which is a stewed meat kind of shop is quite a specific demand, so I'm not quite sure how long they can survive.   RICHARD So dumplings - yes; stewed meat - maybe not.   ALEX Yeah.   RICHARD And how important is property as an investment to people here in Shanghai?   ALEX The property price went up about 30 per cent in 2015 and another 30 per cent in 2016. But after two years of skyrocketing the Chinese government came in with interventions to curb the property bubble in late 2017. So since then we’ve seen a 15 per cent drop from the peak and which bottomed in February this year and edged up 6 per cent since then.   RICHARD It’s been edging up 6 per cent? I mean that's a pretty good edging up, isn't it. Has that government intervention and the slowing of the incredible racing away of prices, has that changed the way that people think about property?   ALEX Definitely property has become less attractive as an investment.   RICHARD And this is something close to your heart as well? Not just professionally.   ALEX Yeah because I bought my apartment in this area in early 2016 so I enjoyed the rally in 2016. However, I also experienced the drop in 2017 and ‘18. But definitely I don't view that from an investment angle, I more treat it as a living purpose. I think one of the purposes for the government to control the property bubble is also to prevent property from crowding out too much consumption. So I think there will definitely be a structural trend for the Chinese household to allocate their assets out of property and gradually into other types of assets like equity, fixed income, and other type of things. And also on the other hand you have more disposable income to be allocated to consumption. So that's definitely both good for the capital markets and consumption for the next decades.   RICHARD Alex Zhang here on the leafy streets of almost central Shanghai, thank you very much indeed.   ALEX Thanks very much.   ----   PARAS Lynda, I want to explore this point that Alex raised on consumer trends a bit more. Does what he said really chime with your own outlook?   LYNDA I think it's quite common to think in that way but from my kind of experience I actually do feel the opposite way. I think that having your property price rising actually creates a lot of wealth effect and increases your consumption power. And second, it also increases your expectation for future growth. So I do think that the wealth effect takes a big part from the property price. It's probably quite good for consumption. And also I did experience a very big drop in the Hong Kong property price back in 1987 when the property price dropped 70 per cent. So that's definitely going to decrease our consumption not increase.   PARAS One of the things that I discovered meeting Chinese companies over the last year is that it seems as if local brands are starting to resonate with consumers arguably more than international brands. And we're very used to this idea that international brands like Nike have global resonance. But what's really surprised me is the prominence and growth and appetite for local brands. Is this is a real shift that we're seeing?   LYNDA It is a very strong phenomenon that’s emerged in the past decade. I think there are two reasons behind that. First one is you have local brands that have really had a quality improvement. In terms of value for money it can give you a better utility. So there is fundamental reasons why the local brands are emerging. And second, also from the consumer perspective, we’ve got a young generation - their consumption pattern is very different from my generation. They're very focused on tailor-made demand and also very focused on experience. And also they’re quite focused on a kind of interaction or feedback. Sometimes the local brands are really good at that, they're very fast at changing their models, their designs, to better tailoring the younger generation customers. Whereas international brands - for example, it's a very typical example, is like a P&G, when they want to launch a new product and try and fit into the younger generation they need tonnes of process approval from their US-based R&D centre but the local cosmetics or FMCG brands they change really, really fast.   PARAS But one of the emerging stories really though is about increasing household leverage. On the credit side, Bryan, is increasing household borrowing a concern for you?   BRYAN The level of household debt is always something we need to be thinking about in any economy, particularly around the rate of change. Someone's property or properties plural as is often the case within China and the mortgage associated to that is typically the largest part of that household debt. That wealth effect and everything that we've talked about is obviously an important part of that. The good thing is generally speaking we don't see excessive levels of debt in the household sector other than the investors and even then it's been difficult to have excessive amounts of debt within the household sector. But as we start to think about things like auto leasing, for example, if we start to think about the use of consumer credit, this is a much trickier part of the household debt problem because usually it's a higher cost of funding, it usually brings forward consumption and of course it's harder for that to sustain rapid growth. And that actually is what brings about cyclicality within more developed economies like the US, for example, which is very much domestic driven with a large amount of domestic credit focus and household debt focus. The development of China’s credit scoring systems or social scoring systems is clearly a way to try and rein in and self-regulate if you will. But I guess I'm not concerned about household leverage at this point of stage but my goodness it's increased quite significantly over the last few years so it's definitely something we need to be watching and mindful of.   GEORGE One more thing to add to sort of link up to that is you know monitoring household leverage levels but simultaneously monitoring savings rates which historically and continues to be one of the highest globally. If that starts deteriorating at a time when household leverage is moving upwards that would be a more worrying dynamic. Haven't really seen that yet happening in a meaningful way.   LYNDA I agree with Bryan. It does rise very, very quickly. But my feeling is that it’s still pretty much linked to the mortgage. So mortgage debt is still so far the largest part of the household leverage. So again it links back to the question of property prices. My view is property prices are going to be stable, not collapsing. And as long as that’s the case I don't think the mortgage-type of household leverage is going to be a big problem.   PARAS Well that's a really helpful insight. If I wanted to bring this all together: what we've really learned today is that the Chinese market, the capital markets, are continuing their process of opening up but really we've seen the pace really accelerate over the last 12 months. Also really interested to hear that our view on the management of the economies by the Chinese authorities, we're giving a lot of credibility for both the efficacy of monetary policy as well as the macro prudential measures. And that whilst we're seeing a maturing real estate cycle and potentially a kind of a more mixed outlook for real estate that in fact the consumption story continues apace. And of course we'll be keeping a very close eye on pigs.   That brings us to the end of our show today. I'd like to thank my guests Lynda and Alex in Shanghai and Bryan and George in Hong Kong. The producers were Richard Edgar in Shanghai and Neil Gough and Seb Morton-Clark in Hong Kong. If you like what you've heard today do subscribe, rate and review us on your podcast app. Until next time, thanks for listening and goodbye.  See omnystudio.com/listener for privacy information.