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00:00[CC may contain inaccuracies] How concerned should investors be about just the pace of that selloff. Well I think investors have always been aware that Falsone is one of these big conglomerates that has many different business lines many of which may be dividend free cash flow up to the whole goal. But many of which may not be. And I think this level of opaqueness is going to hamper their ability to actually get out of this current quandary. But having said that I think you know Paulson can really pick an active approach and address their liquidity much more proactively and just talk about their sources use of cash over the next several quarters. Do you think that fears about contagion risks are well-founded. I think overall the market's really been very focused on the pure play. China real estate property names and footfall son has shown is that a large conglomerate with just some exposure to real estate can actually also be hurt at this point. So I do think that some large conglomerates even though they may not be pure play property exposures will get a lot more scrutiny going forward. But having said that I don't think that this is going to be a massive spillover to the rest of China. High yield for example. So tell us a little bit about the companies cell phone sun's liquidity and perhaps ability to cover its debts. Well the company actually came out overnight and explained that they are going to be able to fully repay the 20 2s and the 20 3s. So if you recall it just a couple days ago they were going out and just doing a partial repayment. And that really spooked investors. And so I think at this point they do have sufficient liquidity. So if you look at the cash versus the short term liquidity liabilities it is rather tight. But right now the market is not pricing in a default although the probability is certainly there. Can there be any real recovery in China. Credit with the Covid lockdown still ongoing. You know that's the 10000 dollar question Sherry. I think it's really going to be hard for investors to come in with new money. So many investors are standing on the sidelines just really waiting for China to pick on a new Covid policy. And I think the issue is not a question of if but just when and where these rolling lockdowns will continue to take place. As a result you know that tends to mute any monetary policy any fiscal policy that they're implementing to really loosen up and actually stoke credit and growth. And so I think investors will continue to be somewhat wary. However I think we are beginning to hopefully see the light at the end of tunnel because as as we get closer to this level of illiquid it lack of access liquidity in markets I think the Chinese policy makers will really have to examine their current policies when it comes to other sectors that we're of course Kennedy watching. There are more signals that perhaps a regulatory overhaul when it comes to Internet and tech platforms may be coming to an end. Are you feeling more optimistic about that segment. I think that the Chinese policy makers took a very strict stance last year when they felt that they had the policy of room to implement many of these policies as they have articulated things like consumer protection anti monopoly laws. But I think this year they've taken on more of a tone of look we might have overstepped and we might have been overconfident. And so nobody did actually. For example in the gaming sector we start the licensing of new games but it's not clear what's going to actually happen over the next several months. We're hopeful that they will continue on this much more of a proactive and much more pragmatic stance that will hopefully bring back positive sentiment amongst both consumers as well as companies. To how exposed is China to an economic slowdown or potential recession here in the U.S. and even globally. Well you know the dirty little secret is that you know the current account surplus you know of China versus United States it's you know bigger than than than really you know before all of these tariffs come in place. And so no doubt you know China is exposed to U.S. consumption. Now having said that though it in many ways you know China is marching to the beat of his own drum. Right. There are going to be a lot less sensitive to inflation than places like United States because they have to a large extent secured a lot of the commodities and they also have much more of a conducive relationship with Russia. And so I think China is exposed to the United States no doubt but much more insulated than perhaps some of the other countries.

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China Credit in Period of Deep Uncertainty: Matthews Asia

Teresa Kong, portfolio manager at Matthews Asia, talks about the bond route of Chinese conglomerate Fosun International Ltd., whose myriad assets include the Club Med resort chain, and its implications for the broader market. She speaks with Haidi Stroud-Watts and Shery Ahn on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

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