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00:00Khun Goh joins us now. He is head of Asia Research, ANZ Research. Very good morning

00:06to you from where we are sitting, Mr. Goh. Thank you so much for joining us and pleasure

00:10speaking with you. Just trying to understand how the jobs data in the US will be seen going forward

00:17and this interpretation that the Fed has managed a soft landing, hence at least US markets will

00:23stay steadily upwards. Is that the right way to look at it? I believe so. I think there were a lot

00:29of concerns about a potential hard landing, particularly when the unemployment rate was

00:34heading higher and it triggered the so-called sham rule. But since then, we've seen the

00:38unemployment rate fall back towards 4.1%, as you mentioned, plus the monthly non-farm payrolls

00:45number continue with this outsized gains. It's very hard to see the US economy going into recession

00:51when you have such a strong labor market. So therefore, the hard landing concerns have faded

00:56away and it very much looks like the US economy is heading for a soft landing. Now, importantly,

01:05this doesn't mean the Fed will hold off cutting rates. And this is really crucial because it's

01:12really the lower inflation numbers that is giving the Fed cover to ease rates and bring them back

01:18towards neutral. And whilst we don't expect the Fed to go big again, like they did last month,

01:25but we're looking at more incremental 25 basis point cuts from here until we get the

01:30Fed funds rate towards 3.5%. Kun, hi, good morning. It's also Samina joining in. FIs have been underweight

01:41India for most part of this year. Now, it seems incremental money is moving into China.

01:47How does India stack up for a foreign investor like yourself?

01:52Look, the India macro story is still very, very positive from a long-term perspective. But,

01:58you know, we have to acknowledge the Indian equity market had a very good run, particularly when

02:04China and the Chinese economic outlook was under a cloud. So we've seen a lot of inflows having

02:11gone into India, not only the equity side, but importantly, on the bond side as well due to

02:18index inclusion. Now, we're starting to see interest returning to China, particularly around

02:25the equity market because of the stimulus measures that was announced two weeks ago.

02:30And the strong rally in the Chinese equity market coupled with low valuations and basically the

02:36world being underweight China is starting to see a bit of that rotation happening right now.

02:42Now, there's still a lot of uncertainty. I would say maybe skepticism on some part around whether

02:49or not the Chinese stimulus measures this time will really move the needle. But I think investors

02:56at this stage are at least giving the Chinese authorities the benefit of the doubt. So we might

03:01start to see some allocation of funds back into China. Some of that might come from other parts

03:09of the region, including India. But this is a short term cyclical type of rotation. I think we

03:16shouldn't lose sight of the fact that over the longer term, I think the structural story for

03:20India continues to stack up very positively. Recommending investors to buy India right now

03:26because like you said, it's a structural long term story. And the fact remains that we've sold

03:31off quite sharply while the index is only down 5% last week. Broader market stocks are down anywhere

03:37in the range of 20 to 30% from their recent peak. So if you look at rupee buy values,

03:44you'd get a lot more right now. So if you believe it, will you sell it?

03:48Well, I think the rupee is a completely different story because we continue to see the RBI managing

03:54the currency very closely. So that's not going to be the main bulk of where the gains are.

04:00In terms of the equity market, I think valuations do play an important point. And as I said,

04:06everything is relative. And at the moment, there's a lot more excitement, I guess, in the near term,

04:12in terms of what's going on in China. So we might start to see China taking some of the

04:20glamour for the near term, shall I say, until we see where this rally in the Chinese equity market

04:26ends up. Yeah. Kun, just in terms of the outlook for India, you said that the

04:36long term story remains positive. What we're seeing in terms of the move towards China is

04:42a rotational play. When do you see that cycle sort of reversing and flows coming back to India?

04:49Look, I think some of these rotation can take a few months, to be fair. We have seen a lot of

04:56foreign investor outflows from China, particularly in the last couple of years. So it might take a

05:03while for the foreign inflows to get back into China, particularly as it seems like we are only

05:10at this early stage since the stimulus measures was announced only a couple of weeks ago.

05:18Kun, quick question. What is the outlook on crude? Are you long crude? Are you long gold?

05:24And also, would you buy metal stocks in India or across the world?

05:30Well, we remain quite positive on gold. We believe that despite gold hitting all-time highs,

05:36we believe that's further upside for it, particularly given that there is

05:40ongoing strong demand from central banks as they continue to increase their official FX

05:47reserves allocation into gold. And I'm talking about physical gold demand here, coupled with

05:54ongoing retail demand from emerging market countries. So I think there's still further

06:01potential upside for gold, particularly as we continue to see potential for the dollar

06:06to weaken, notwithstanding the recent rally that we've seen since last Friday. But as the Fed

06:10continues to cut rates into next year, we expect the dollar to continue to slip over, and that will

06:16provide support for gold. In terms of crude oil, just very quickly to round off, we anticipate

06:26crude oil to pull up at the moment because of the ongoing geopolitical tensions that's happening in

06:33the Middle East. But as we head into next year, and if the stimulus measures from China do start

06:42to see growth, particularly domestic demand making a comeback in China, that's going to

06:47improve and increase demand for global crude prices, which will start to see crude heading

06:54high into next year. So we are looking for a recovery in brand crude oil prices back towards

06:59$80 a barrel by next year. There's a barrel on crude, and that can't be good news for an

07:05economy like India. But Kun, great talking to you. Have a good week ahead, and we'll speak to you soon.

Will Markets Bounce Back After Strong US Jobs Data? Khoon Goh Answers | NDTV Profit

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