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00:00DOESN ' T THIS TO MY -- REMIND YOU A LITTLE BIT OF EARLIER THIS YEAR WHEN WE SAW THE POSSIBILITY OF A TRADE DEAL BEING DONE? WE ARE SEEING THAT NOW WITH THIS RUN-UP IN STOCKS. WE COULD BE HEADING TO A FALL IF WE DON ' T GET SOMETHING DONE HERE. > > THIS IS DEFINITELY ONE OF THE RISKS THAT IS OUT THERE. WE JUST PUBLISHED OUR 2020 VIEWS. THERE ARE TWO MAIN RISKS THAT MARKETS NEED TO BE AWARE OF. THEY ARE WELL-KNOWN AND WELL FLAGGED BUT THEY ARE CERTAINLY THE ONES TO PAY ATTENTION TO. NUMBER ONE WOULD BE TRADED NUMBER TWO WOULD BE THE U.S. ELECTION. ON TRADE, THE MARKET HAS RALLIED QUITE SIGNIFICANTLY ON THE HOPES OF A TRADE DEAL BEING DONE. WE HAVE A TRADE TENSIONS BAROMETER UP ON BLOOMBERG. IT IS AT THE 70% LEVEL. WHICH IS PRICING IN THE HIGH PROBABILITY OF A DEAL. IT WAS BACK AT ABOUT THE 10% LEVEL FOUR MONTHS AGO. MARKETS HAVE HAD A STRONG REPRICING. THE RISK-REWARD HERE IS NEGATIVELY SKEWED. IF A TRADE DEAL IS DONE, MARKETS WILL BE UP FLAT. IF THERE IS NO DEAL, THEY WILL FALL. THE SECOND IS THE U.S. ELECTION. IF THERE IS A POSSIBILITY THAT THERE COULD BE A UNIFIED DEMOCRATIC ADMINISTRATION, IT IS HIGHLY LIKELY THAT THE TAX CUTS OF 2017 WOULD BE ROLLED BACK. THEN YOU ARE LOOKING AT SOMETHING UP TO A 20% CORRECTION IN THE S & P, WHICH WOULD BE HARD FOR OUR MARKETS ARE TO DODGE. DAVID: I WANT TO TALK ABOUT THE HONG KONG DISTRICT ELECTIONS. DOES THAT CHANGE ANYTHING FOR YOU? > > ARE SINCERE IS THAT THERE IS A PRETTY GOOD BALANCE WITH HONG KONG SPECIFICALLY. WE ARE NOT JUST TALKING ABOUT THE HANG SENG INDEX. THE HONG KONG INDEX IS A NARROWER FOCUS. A LOT OF BAD NEWS HAS BEEN PRICED INTO THAT. TO PUT SOME NUMBERS ON THAT, THE INDEX IS TRADING AT OVER A STANDARD DEVIATION BELOW ITS TEN-YEAR AVERAGE. THE PROPERTY STOCKS ARE TRADING AT ABOUT A 50% DISCOUNT. THAT IS SIGNIFICANTLY BELOW WHERE THEY TYPICALLY TRADE. THAT SUGGESTS A LOT OF NEGATIVE NEWS HAS BEEN PRICED IN. WE JUST HAD A PEACEFUL OUTCOME TO THESE ELECTIONS. THERE MAY BE ROOM FOR SOME APPRECIATION. WE STILL MAINTAIN A MARKET WEIGHT OF HONG KONG. THE NEW CYCLE HAS BEEN SO UNPREDICTABLE. THAT VOLATILITY MAKES IT HARD TO HANDICAP WHEN ONE SHOULD BE ENTERING THE MARKET. IF YOU HAVE A LONG-TERM VIEW , THE MORE YOU SHOULD BE ORIENTED TOWARD A POSITIVE VIEW. RISHAAD: PLEASE STAY WITH US.

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Trade War, U.S. Election Are Top Market Risks: Goldman Sachs

Tim Moe, chief Asia-Pacific equity strategist at Goldman Sachs, discusses the top risks to markets and his outlook for Hong Kong assets. He speaks on “Bloomberg Markets: Asia.” (Source: Bloomberg)

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