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00:00[CC may contain inaccuracies]Tell us a little bit about the repercussions to the Asian market if we do in fact see a U.S. recession and what parts of the market are defensive enough for you to feel secure to in a peak at this point anyway. A big distinction between China and almost all of money China. So starting with all over non China I think to some extent isn't it just a slowdown. We're beginning to see in the U.S. for the most part also going to see that here sales and that since there is probably a bit in lockstep. And we also have frequently for many of the central banks also assumed that they're not trying to stay too too far behind the Fed because also especially where you have current account deficits that you have the currency is on your rails. And China on the other hand is the right. If we if we compare also from a market point of view I see you as just just past the gold peak. Of course the inflation issue consumer inflation as well. And you have to tighten when China is just sort of already there. China over the last couple of quarters has had already traveled. In that sense. Down to what we think is maybe one maybe two percent and loan growth in the current quarter as we speak and consumer inflation that is not that much of an issue. So they can lose. And therefore it is not surprising actually to see that right now that the Chinese market is about the only one. If you look at the last two three months that it's actually going up. Yes we're pretty resilient despite the global selloff and talking about China. Beijing also hosting the virtual BRICS summit. I love your call on your notes for you say position from the era of security. Tell us how you factor in China and its warning about sanctions and global economic pain as well. Is this just a general global observation that many countries now rethink their their strategies or would it where do they get their energy from potentials or would they get their food from with weather. Weather. And this is perhaps not even such a new trend but many countries with it's Ian's DNA doesn't really matter if already even before the Ukraine war started to think about going whether there there is military spending also is sufficient or not. So. So these are areas where we see shifts where we see things moving and also growth in that sense. And this is something also as an investor one can one can exploit. In terms of how much you're hedging for inflation at the moment what sort of opportunities GSE given. It's just the I guess the unusual construct of the inflation risk. Are you still looking for inflation hedges. Yes to an extent. That and also in conjunction with what has also been discussed on the program before I'm indeed the economic slowdown that comes with the inflation fighting. So we need to look at both. And you imply sort of a toolbox and their deep discussion whether we really gonna hit recession or just a slowdown is almost almost a bit academic ready because the way you need to invest for it is somewhat similar. So so starting with equities yes we have for example you're overweight on the health care sector which is not that sensitive on the economy. Also in terms of input costs it is not really that sensitive to energy or even food for that matter. Hedge fund certainly one of the parts in the toolbox that tend to thrive or have a better opportunity set in an area like this. And then last but not least also bonds with which for the last couple of years really especially the safer ones weren't reading on anybody's radar. Now you're getting here in a fake investment grade on say 5 percent. Not difficult to find. So combination of those. You're also quite constructive when it comes to Australia. Yes I think especially a commodity related but also countries that will currencies in this case is also something we certainly especially when you think about inflation is an angle that is valid or has to be considered investment and especially of course the Australian relationship with the supplies to awards China which as we know you can argue about the pace but it is starting to reopen. From from Covid. And even if it's perhaps in some cases a bit cautious. But it is happening so that when that happens China's stimulus on top of it. That is certainly also an angle investors should explore.

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UBS Wealth Management Sees Opportunities in Commodity Currencies

Hartmut Issel, head of Asia Pacific equities and credit at UBS Wealth Management, discusses how a potential recession in the U.S. might affect Asian economies and markets, and the opportunities he sees. He speaks with Shery Ahn and Haidi Stroud-Watts on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

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