Japan Likely to Ease Policy Further: Brice

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April 21 (Bloomberg) –- Standard Chartered Bank Chief Investment Strategist Steve Brice discusses Japan’s economy including the recent trade data and where he’s finding opportunity with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Says that emerging markets are starting to look more attractive.

Steve, good to see you this easter monday morning.

Of course, the bunny rabbit bringing in semi-mixed basket for japan's economy.

Let's talk about the latest trade data.

What to tell you -- what does it tell you.

? it shows there is domestic demand in japan.

We would expect exports to pick up as we go through later in the year as the u.s. economy accelerates at of those europe.

But overall, expect it's consistent with the authorities attempts to keep the yen week and probably push it weaker through the rest of this year.

What do you think of boj monetary policy perhaps the second monthhalf of this year?

Do you think it will offset any perceived slowdown in the sales tax?

Are scenarios that authorities come in and provide further stimulus.

But from the bank of japan perspective.

A key point, if you take into account the yen weakness ari, that has been a key driver of inflation being pushed higher.

But that affect fades over time.

We believe that we need continued yen weakness, we get from here to -- weaker from here to keep inflation positive.

Accelerate stimulus as the data comes in weaker towards the end of this quarter is what we are expecting.

Continuing with this easter theme, where would you put your bigs, in which global basket?

We still prefer developed market equities, both the u.s. and european markets at this stage.

We have very good visibility on earnings growth in the states.

We are starting to see profit margins pick up in europe.

We don't leave either market is expensive when you take into account where inflation levels are.

That is the key point.

If you look at price ratios in the u.s., they are above historical averages, but not above historical average when you say inflation is not 4 -- when you say 4 is not percent -- when you say inflation is not 4%. but if you are looking for opportunities in emerging stocks, where would you look?

We still prefer northeast asia, particularly south korea and taiwan.

We do believe it is going to increase.

That should be good for the technology sector.

China is always interesting when you look at valuations.

But once you strip out the banks in particular, not anything like this cheap.

We may see some stimulus from the chinese authorities at some point but we don't see a big reversal of policy, the tightening policy we've seen in recent months.

We see that continuing as a trend.

We may get some agility coming through from the chinese authorities.

But that is expected to be transitory.

The big picture trend is they want to deleverage the economy.

They will take time getting there but that is not good for the stock market.

Do you think it is more of a hard landing or a soft landing?

Of course, trying to avoid the hard landing would mean that the chinese government would have to do a lot more.

But what is your assessment thus far as how far the slowdown can go in china?

We still believe that growth will be above 7% this year.

We don't believe china's economy is going to be a positive for global growth.

But we think it will be less of a negative.

If you look at the economic surprises indexing china, it is down lower than ways even -- lower than we even saw in 2008, 2009. we believe the authorities will keep it above that level.

Therefore, as i say, it is not a positive but it is less than a negative.

So if you are to take a look at opportunities in china, what jumps out as most attractive to you?

Generally, the global level, we do like technology space.

Obviously, the main focus in china remains on trying to stimulate consumer spending.

Obviously, a lot of that is priced into equities to some degree but that is going to be a key policy driver of the chinese economy and therefore chinese financial markets over the or so the next six to 12 months and probably longer.

Infrastructure areas look likely to be relatively subdued.

We see infrastructure spending following, capital spending falling.

So those areas are vulnerable in the near-term.

That is steve brice.

Thank you so much for this easter monday assessment.

Coming up next, we will be checking in on how the japanese yen is performing following the disappointing trade figures.

This text has been automatically generated. It may not be 100% accurate.


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