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00:00So you talk about these economic cataclysms that are playing out in real time. Yes. Is this a sense of a return to Earth of the last few years? I would say I'd say so. And by the way, thanks for having me here today. I think we've had a kind of 14 year back and since 2008. And so there are a lot of these chickens that are kind of coming home to roost. One of them happens to be within the middle market corporate space, where the kind of falling to earth of tech is one of many areas within the private equity and venture space that is going to be rationalized. What opportunities do you see in Asia Pacific in particular? Well, we're where that's concerned. I think we're quite interested in some of these situations here in Asia where there were very, very large tech companies that were private well into their eight, 8 to 10th rounds of equity financing, who sacrifice profitability for growth, who are now trying to turn the boat around. Right. And so it with with the IPO markets potentially closed for them and a down round in their future, they're looking at kind of special situation credit opportunities in order to kind of bridge themselves toward profitability. When you take a look at a situation like Adani, I'm really keen to get your views, observations on what's played out. Is that a special situation? Is that a situation where it makes you kind of rethink the cracks and potentially the opportunities within that type of emerging market complex? Sure. I think it raises the issue of the degree to which Asia-Pacific credit and large scale finance is can be subject to the rules that we apply in the United States and Europe. Right. And so when you look at the degree to which the Adani situation is wrapped up with the government and you think about what how creditors might actually exercise their rights, I think you see a lot more risk than people usually give a credit for. Do you see any other concerns across Asia? Because, of course, we have seen concerns about the multi-layer networks of stock holdings between these large conglomerates, say, in South Korea as well. Sure. I think that's a real issue. I'm sure you you followed the situation with Lego land there. I think there's a very small number of very material players. And there in that highlight, that situation highlighted the degree to which capital comes from a small group of folks, but also the degree to which it's really highly dependent on on a lot of asset liability mismatch funding. So in that case, there are a number of lenders in in in Korea that had very, very short term obligations. And so when those things couldn't be rolled over, you had a real problem arise very quickly. You're saying you're in sales, so you're patiently monitoring the liquidity of corporates in South Korea. Explain that to us. Well, that that situation has made people remember that things don't always go up. And so we've been involved in a variety of different what I call a special situation financings with small and mid-sized corporates. In Korea, as well as looking at how that situation is going to affect real estate, property markets there as well. There's a lot a lot of room on the way down. Yeah, I was going to say, is the real estate sector in many of these economies on investable now given the rate trajectory in many of these economies? Well, it's a good question. You know, there is a price for everything. I would say people are re-evaluating the cap rates necessary to kind of make these products work. They're looking at the degree to which material labor costs are increasing. Given the greater levels of inflation versus what we've seen in the past, you know, in the past 14, 15 years. So it's definitely it's definitely not easy. But I think you want to be running toward that, looking for opportunities and thinking about how to take advantage of this rationalization process. Is it like back to the global financial crisis days when you take a look at what's going on across, again, mortgage backed securities, particularly when the right environment is still so volatile going forward? I think there are there are elements of that. I think reality is in the case of the 08 crisis, we had a lot of tools in the toolkit of the monetary authorities to deal with it. They really emptied them out when QE 2 happened in 2012. And that's been exacerbated by fiscal policy and most government since 2020. So now you have arguably a lot less ability to kind of deal with a very sudden spike in difficulties. I got my start in Asia Pacific investing and in the fall of 1998 when that when one of those spikes happened. So is it possible? Yes. Are there a lot of ways that people are much more inclined to kind of push things that go off and make it into much more of the same? As an example, a longer tail Japan style situation where you have to basically get the bubble to come down over a couple of decades.

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Arena Investors' Zwirn on Global Markets

Dan Zwirn, CEO & CIO at Arena Investors, discusses his views for the global markets and investment strategies. He speaks with Haidi Stroud-Watts and Shery Ahn on 'Daybreak Asia'. (Source: Bloomberg)

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