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00:00[CC may contain inaccuracies] This is a big change in just a month from a month ago. It looked like the US was something that we should be overweight and now you switch that to international. Is this because the Fed pivots Omicron. Well I mean the equities are still going to do OK next year. I mean we'll have a target at this DST. I think you could get double that. And some of the international markets including the emerging markets. Now a lot of this is valuation. I mean we really had emerging markets lag. I mean underperform by 25 percent. So the valuations are attractive here. But we also do see the growth cycle having really bottomed in many of these markets and coming back. So I think that in international equities there's better value right now. Even though U.S. equities are set to do well and some markets where we just have to be more cautious like the U.K. parts of Europe are looking attractive but also in the emerging markets. I mean China has gotten very beaten up this year. We're seeing valuations that are attractive there as well. And even in Brazil. So I would just say that some of this U.S. exceptionalism could be fading next year even though the US is above trend growth. Consumer spending is looking in very good shape. But some of these international valuations they're attractive now. So when you say international can you give us an idea of where exactly you're thinking of. Because obviously we have this policy divergence in many countries now and the international is also very pick and make. Well I mean everybody is focused on the Fed and when the Fed will start liftoff which we think will be in June. But in many of the emerging markets they started hiking much earlier. So we actually think this is an attractive point to look at Brazil. And even in China after the central economic working conference they really did send a message that they want to focus on growth. And we think that growth bottomed in the third quarter of the year in China that you're going to see better quarterly performance coming up. And so we do like some of these plays in China as well as China and Brazil stand out but also the U.K. as well. So I would still say that you know U.S. equities looks to be in a good place. And we look at returns that still could be sort of high single digits. But you're looking at double digit potential returns in international markets right now. And part of that is that there are divergent cycles. Some of the central banks have already moved in the emerging markets pretty aggressively. Joyce I want to throw out this chart that takes a look at the severe underperformance when it comes to China and Hong Kong this year right. Particularly when you take a look at just how Chinese equities have struggled to catch a break with crackdown after a crackdown. And the jib politics piece really not helping there as well when you take a look at the orange as well as the green lines. What do you like in terms of relative safety and opportunity in the Chinese markets. Because we've had a lot of optimism a lot of houses saying that they see around 40 percent upside when it comes to Chinese equities for next year. Well consumer discretionary stands out to me. I still think you have to be cautious on the property sector but some of the renewables some of the new industrial sectors I mean some of this regulatory tightening is going to continue on some of her large platforms. So we're underweight on gaming. We still think that you have to be cautious. Common prosperity means that you're not going to see some of the shift weigh on regulatory tightening but consumer discretionary should do better. There is clearly in the more recent speeches your signs of the credit easing that will be forthcoming. Also better growth numbers that we'll be printing up more underweight in health care. But we think that some in many of the markets that are also focused on the commodities that they will perform better as well on the energy side not just in China but across the board. We do see oil prices. You're seeing around 80 dollars or even a little bit higher than that. Has property bottomed. I think that property has priced in a lot. If you take a look at the default rate that is being priced in for trying to property bonds. I mean it's 35 to 40 percent and I think your default rate is going to be half of that. So I think you haven't bottomed in certain areas in the property sector. Now that still is one of the biggest risks that you have to have the growth outlook right now just given the size in the overall economy. But I think much of that got priced in. And I do think that the government is taking some selective targeted credit measures here on the credit easing side. And they have really sent the message that for them consumer discretionary. That's where we do see more opportunities.

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JPMorgan Expects International Stocks to Outperform U.S.

Joyce Chang, global research chair at JPMorgan Chase & Co., explains why she expects international equities to outperform U.S. stocks next year, and the opportunities she sees. She also looks at the debt woes among Chinese property developers. She speaks with Vonnie Quinn and Haidi Stroud-Watts on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

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