Hello. I'm joined here today by Sukh Sangha portfolio manager, Energy Investment and Treasury office. So six starting with US drivers are performance. What's going on here and why does it continue to outperform? Yes so US has been performing recently and there's been a few reasons for that. The first is yields. So after the low in november where vaccines were discovered and released by the the authorities there and the biden election results, we had a strong rally in risk assets um On on the back of positive global growth momentum yields followed suit and they peaked around about February at about 1.8% in the US10ure. But since then they've been grinding in and these lower yields have actually helped the U. S. Equity market in particular because there's a larger proportion in great sensitive stocks such as these mega caps which have helped propel performance in the U. S. Equity market. And the and the other point is negative real yields whereby traditionally negative real yields are a um tale a tailwind for equity assets. And let's not forget strong earnings quarter after quarter after quarter. The U. S. Equity market has provided robust earnings which had beating expectations quite strongly. And that has helped propel the market higher. And lastly but not least is economic demand has been gradually returning in the U. S. Where the lockdowns have been gradually easing. And the vaccination rate has increased quite dramatically although departed recently. And that has led to economic demand being stimulated and kind of feeding into strong innings that we've seen. And what to you is the risk of the Fed's slowing down bond purchasing and what would be the impact on the market. Yeah. So uh the Fed met last week and they released a press release where Fed Powell basically reiterated his stance in that he thinks that inflation is going to be transitory. um and the higher prints that we've seen largely due to supply factors. We've had the supply shop from um semiconductors, which has led to certain components of the inflation basket ramping higher. So we've had increases in new used and rental car prices and uh he believed that these factors will fall away gradually. Um And also secondly, he has two parts to his mandate, one is price stability and the second is full employment and because of the high unemployment rates that we have right now, he believes that they will still be quite accommodative going forward. So therefore they will be lower risk of a taper. That's not to say that there aren't risks. That view. He himself stated that the nearest near term risks to inflation could be higher. And we believe that certain components of the inflation basket could start to increase, such as the imputed rents basket, which is quite a large proportion of the over inflation basket. He also stated that if he saw broad based inflation take hold, I other components of the basket start to increase it. He'd also reassess his stance on inflation. Um and finally, um if unemployment started to get filled quickly and you got back to trend unemployment relatively quickly in a kind of few quarters, then it also reassess where they stood. And what do you think is holding china back currently? Yes, So currently in china markets are basically reassessing the relationship between government and the private sector, um the Communist Party and believes in sustainable capitalism, one that growth is shared across a society. And in the last meeting they actually mentioned three mountains that they want to overcome to make sure that goal is achieved. The first is property, property is quite a key component in the chinese economy and they feel that excess speculation is taking hold and leverage is quite high and they've been taking measures not just recently, but over, over the recent past to try and curtail that. And some companies which have been above these leverage rules have have suffered where they tried to crack down on credit growth such as ever grant the second mountain that they want to try and overcome is education. They believe that education should be at a standard level, um, and and attainable by all of society. And what they've seen recently is that um, if you're rich enough and you have access to online educational tools by that have been provided by certain companies that puts that part of society and unfair advantage compared to the rest. And they wanted to equalize that by making sure that that doesn't happen. So they cracked down on the education sector And finally the 3rd mountain that they want to overcome is health care. They believe that you should have standard health care across all society. And pharmaceutical companies have been raising prices and they want to limit the ability of companies pushing out parts of society accessing certain health care so they want to put through reforms to hamper price increases and unrelated to the Free mountains has been data. The Communist Party believe that certain companies have been using the data inappropriately not adhering to their guidelines and they tried to crack down on that. And finally the I. P. O. S. Um chinese party believes that capital markets are strong enough domestically to attract capital and therefore they want to limit chinese companies going overseas raising capital. This could be a precursor to what was happening in us, where the U. S. Have been trying to clamp down on chinese companies listing in the U. S. Markets there Um altogether. So putting all that together, what we've seen is the Chinese equity market has had a strong run from 2020 and since 2021 year today up to June the performance was pretty much flat on the back of pboc tightening credit and the data issue that I mentioned previously. However, we saw a bit of more volatility in july when the reforms or clarifications on education and health became apparent and the monetary authorities actually helped ease the volatility, but we still have a bit of a set off there. However, what we see overall is that this is just underlining what the chinese government thinking sustainable capitalism and as a market we see this as an opportunity. And active managers have been adding names that have essentially been thrown out with the bathwater and active performance should add value. From here and recently we've seen an increase in market volatility. Do you think this will continue? Yeah. So basically risk assets have had a good run up to now and they cut out slightly. Um I think there's two conflicting forces at play here. One is inflation. The market trying to assess whether inflation is transitory or not. We've seen Prince surprised to the upside over the last couple of reporting periods. However, on the flip side, we've seen bond yields come down. So the markets are trying to reconcile what that really means and this kind of bond market volatility could actually uh stem through into equity market volatility. So our tactical team have basically decided to reduce and go back to neutral. And we did that in our about june this year. Um And we also actually uh we were long risk coming into this and particularly china and we reduced our china positions back to neutral around about april May this year. So I think we have time that quite well. However what we see is going forward after the summer period we may be adding to um certain pockets of value. Should opportunities arise? How are the fund's position to grow going forward? Although although we are positioned neutral in terms of our tactical positioning, our strategic asset allocation still has um awaits within china and Asia as we do believe over the long term, this part of the global economy should add value. However, from a tactical basis if we see pockets of value, we would also be adding tactically. Unfortunately that's all we have time for sick. Thank you for joining us today. Thanks again.