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[music] >> Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought you by TD Direct Investing.
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We'll take you through its moving the markets and answer your questions about investing. Coming up on statio, we are going to discuss the outlook for China's economy as it grapples with rising COVID cases with TD Asset Management Alfred Li. And in today's WebBroker education segment, Nugwa Haruna is going to show us how you can find a company's financial statements using this platform.
So here's how you can get in touch with us. Just email moneytalklive@td.com or you can salute that viewer response box right on the video player here on WebBroker.
Before we get to our guest today, let's get you an update on the market action. The Americans are back at it full speed after last week's Thanksgiving holiday.
There was no trading on Thursday, half day on Friday, so everyone's back in the game today.
You do have some concerns about what's happening in China right now with the rise in COVID cases, some of the process putting a bit of caution into the markets, 20,296, got the TSX here at home on Bay Street down a little less than half a percent.
Oil took a heads earlier today but it's recovered modestly. I want to check in on some of the energy names which were under pressure. We still have some core to the downside but it 4675, it's down a fairly modest 1 1/3%. West Texas Dominion crude up a little more than half a percent after a fairly sizable drop in the earlier hours this morning.
Shopify off the back the big shopping weekend, of course, Thanksgiving in the states gives way to Black Friday, cyber Monday. Shopify reporting it did see a 17% increase in sales over the weekend compared to earlier periods and that stock is up to the tune of 3.7%. South of the border, let's check in on the broader read of the American market, the S&P 500.
A bit of caution here as well, down 32 points, a little shy of a full percent. Tech heavy NASDAQ, want to see how it stacking up against the broader market.
But the NASDAQ down about three quarters of a percent, sort of matching pace.
And Exxon, another big energy name is said to the border, but pressure here but not quite as dramatic as it was earlier in the session, hundred and 11 bucks and change, down a little shy of 2%. That's a market update.
Investors are keeping a careful eye on searching COVID cases and growing frustration with lockdowns in China.
aand of course, this all has big implications for the global economy. For more on this, we are joined now by Alfred Li, co-lead for international equity at TD Asset Management.
Great to have you on the program.
You are here in North America, usually based in Hong Kong, it's a pleasure to have you here.
>> It's a pleasure to be here.
>> Let's talk that some of the headlines that investors have been digesting over the weekend, there has been unease in China due to the lockdowns. How is this view from an investment perspective?
>> I think this actually indicatesthe beginning of an improving of the situation. Obviously, after the 20th CCP National Congress, guidelines were issued essentially calling for regulatory loosening of the zero COVID policy, but this is a trial approach.
China is taking baby steps in order to makesure that things are progressing without causing additional risk to the population.
Obviously, these have made people become more optimistic for a more sensible opening up.
But with the two steps forward and one step back, the situation is not progress as hoped. Potentially some frustration has emerged.
But I think if you look at the policy aspect, the number of cases achieved were reached during the day has already… Arrived in the last episode in Shanghai, last April, but we have much higher percentage of new cases that have no symptoms and we have only five death cases compared to north of 500 last time around, so that means either herd immunity has somehow been established in the community or the past two years of dynamic lockdown, or the Chinese vaccines have better efficacy than people suspected.
So I think we are on the right track, but it's a process.
>> So adjusting things, as all of this unfold in real time, what should we be thinking in terms of the application for the Chinese economy? Because there has been concern about the surgeon cases. You say there's a reason for optimism out there. So what does it actually mean for the growth for China to achieve there?
>> I think, obviously, the consumption recovery is going to take time, because the Chinese government will probably adopt a very slow approach. Over the last two, three years there have only been five cases in this track record is what the Chinese authorities meant to keep.
So at the tail end of this disaster, they want to make sure that the whole economy, the whole population gets through all of it smoothly. So they are expecting about four, 5% growth in consumption in 2023, in the early part of 23. This is a gradual or slight improvement from this year's level. At the same time, what's going to support the economy to continue to expand is going to continue to be a traditionalasset formation and also new infrastructure investmentwhich lets factories grow to 68% level.
The last sector, we can now safely… Achieved the soft landing… Jointly issued policies urging both policy banks and commercial banks to provide direct financing to projects that are yet to be completed so that the developers in trouble, their underlying assets are not going to have to spill over to the broader economy.
At the same time, the credits and financial supports are being provided to the remaining players in the industry so that they can remain functional, as they should, given their disciplined balance sheet and their capacity or their capability to continue to operate.
On the other side, we can expect some headwinds given the expected deterioration in the global economy as the market for Chinese exports diminishes. We are expecting mild improvement from the current year's number or level for the Chinese economy of GDP growth to achieve about four or 5% per annum growth in real terms.
>> So it's a possible cattle is there for the economy into the next year but perhaps some challenges as well when you talk with the global economy.
What about the Asia-Pacific economic cooperation summit? What did we glean from that?
>> Activities that Xi Jinping has done.
so the G 20 is automatically followed by the APEC meeting.
over the course, Xi Jinping and a group of world leaders from the developed world and from developing countries across different regions, if he puts these meetings and four, five groups, firstly, I think most noticeable is Xi Jinping's meeting with Joe Biden.
I think this is sending a very positive signal to the world market given that the two leaders mutually agreed on that they should continue to curb… Inflation, conflict and focus on an area that the two countries can work together while at the same time acknowledging, especially from the US side, that China is the competition that they are going to compete against going forward.
With European leaders, Xi Jinping had a constructive discussion with the German counsellor, with the French prime minister, with the leaders from the Netherlands, Italy. These four leaders, essentially, the message coming out of the meeting indicating that China's stance is essentially to urge or to ask the countries to say independent in terms of making policy decisions and making decisions based on their past benefit for their economy perspective.
With the group of leaders or the developed countries in the Asia-Pacific region, mainly Japan, South Korea, Australia and New Zealand, the message from there and both sides bilaterally agreed on mainly not to interfere with geopolitical tensions, bilateral economic collaborations and international trades between China and those countries.
So these maintaining, containing conflict and developing economic collaboration and promote international trades are the main themes with this group of countries.
The fourth group is the with developing country is, we seen in the Asia-Pacific region, particularly Southeast Asian countries,Those are more close alliance with China, they are mostly… There are more broad-based collaboration between China and those countries in terms of transportation networks ranging from railroads to… And also direct investments from China into those countries across different industries, and also the rapidly expanding global or international trades between businesses in these countries.
Collectively, our CDP or Asian countries account for China's number one trading partner around the globe, so these groups with huge populations and rapid growth, economic growth, but from a relatively low base, obviously, it is what China is trying to cultivate going forward as the main both a main source of economic growth and international cooperation.
>> Fascinating insights on the region and a great start to the program. We can have a lot more coming up.
We're going to get your questions about China's economy and the markets up for Alfred Li and just moments time.
Our minor, of course, you can have with us any time.
Just email moneytalklive@td.com or Philadelphia response box right under the video player on the broker.
Right now though, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Casino stocks are in the spotlight today, that after China granted provisional licenses for several of the biggest names in the gaming industry to keep operating in Macau.
the news initially sent names such as Wynn Resorts, Las Vegas Sands and MGM Resorts higher in the premarket, but the trading activity has been a little more mixed in today's session.
Canada's largest banks are on deck to report quarterly earnings this week.
Rising interest rates are generally favourable for a bank's net interest margins,and there were to be a key focus for investors. The market will also be watching provisions for loan losses amid all these warnings about a possible recession next year.
Shares of Credit Suisse continue to skirt record lows in the wake of a massive outflow of investor cash.
Concerns over the health of Switzerland's largest bankis also affecting its debt, with its bonds falling and the cost of insuring its debt against default on the rise. Just last week, Credit Suisse warned it could book a pretax loss of some $1.5 billion in the fourth quarter.
It let's check in on the market, we will start here at home on Bay Street with the TSX Composite Index.
We saw cautious start to the trading week. Oil is off of it the lows of the session, actually looking into positive territory and taking some of the Pressure off but it's still down. It down 104 points, little more than half a percent.
check in on the S&P 500, the broader read of the American market, and that they are back from the holiday weekend, backfill scene.
42 points for the downside of the S&P 500, a little more than 1% to the downside.
We are back now is Alfred Li and we are taking your questions about the Chinese economy and markets. To look after them. First off the top, what are yourThoughts on China's housing market?
>> I think China's housing market certainly has… In the past 23 years due to the continuous downturn or decline.
There are many nuances to it.
Firstly, the Chinese population has been approaching the peak, and the Chinese labour force actually has peaked out all the way back in 2010.
The median age of the Chinese population is now approaching 40.
All of these points affect that there should be a slowdown in the retail asset industry.
But before the Chinese government starts to deflate the bubble before it further expands, the industry, especially some of the more aggressive players, have been continuously aggressively leveraging their balance sheet and intensifying their activities, so this triggered the government's preemptive action against the sector.
What I see with this development is it provides a opportunity for Chinese households who need to start to diversify their wealth among different asset classes.
Presently, more than 60% of Chinese household wealth is in real estate while 2% is invested in equities.
so the longer-lasting stagnation of home prices, that will trigger the household to start to diversify their investment and certainly, thirdly, the capital flow, this is an opportunity for capital flow to start to invest in areas that can generate more high-impact value for the economy.
As we just mentioned, the previous two decades, the Chinese economy has been mainly driven by the labour force expansion and relatively lower labour costs.
This is essentially what you can call the globalization model.
But as the labour force starts to shrink, although there is still human capital continuing to grow given higher education and overall labour force is demonstrating, but China certainly needs more or being able to more efficiently leverage on more broader based factors to continue to propel the economy, namely technology innovation, traditional, physical infrastructure,new infrastructure in terms of IT networks, big data and the environment and cultural environment to retain top talent. Those are all areas that China is trying to fill up in order to generate better efficiency, better activity from the marginal input perspective.
So I think those are all related to the decline of real estate as the single largest asset class within China.
>> Very interesting analysis there of China's housing market and where it might be moving toward. We mention briefly the 20th party Congress off the top of our chat but we have of you are now wondering what were some of your big takeaways from the 20th Party Congress from the perspective of the economy?
>> I think the major signal or the new slogan that came out from the 20th party Congress is the modernization in Chinese style work with Chinese characteristics. This is a very broad concept that covers not only economic aspect of China but also includes social development, governance, legislation and law enforcement, environmental protection and expansion of the cultural environment. This relates to the economic interpretation of this process or planning. His ultimate goal is continuously used to be… This is also the latest iteration of what the Chinese government has at the centre of its effort over the past decades.
Essentially, common prosperity traces back tothe pursuit of equality at the beginning.
And now with the gradually cumulation of wealth, we have seen the Chinese economy, the meaning of prosperity now refers to a broader concept, including for the population, for example your choice of career, your living environment, your welfare, your healthcare system, your ability. The comment refers to also continuously the equal distribution or equal access of the population to those items. In order to achieve that in modernization, therefore, is a very systematic approach ranging from, for example, ranging from made in China 2025, emphasizing on continuing to build out a strong impact of industry within the Chinese economy with the emphasis of revitalization of the rural areas in order to reduce the inequality between the rural population and the urban population. There is also thefocus on the power transmission system which is also put in place in part to narrow the gap, the economic development gap between the hinterland and the coastal areas of China.
So this is how all the new development that came out from the 20th party Congress.
>> A lot there but no better person to break it down for us than you, Alfred. We'll get another question. So much talk this year about inflation and global central banks. Someone to get your outlook onthe People's Bank of China.
What are you seeing?
>> The Chinese economy has been able to maintain… You're seeing 9% inflation in Europe and 8% inflation in the United States. The reason for the Chinese inflation to stay at a relatively lower level, obviously, is we can trace this back to the PPBC use's reluctance to overstretch its balance sheet. There is no flooding of money into the system. There is no helicopter money took place over the past three years during the pandemic. Instead, with the central bank is trying to do, they already have so many shovel ready projects and modernization with Chinese characteristics umbrella so they can more process the direct flow into those areas ranging from alternative energy including solar and wind power, there is integrated power generation being built out in the West North part of China, integrating hydropower, wind power, solar power in the traditional coal power together in order to make sure the outputs of integrated power facility is smooth in order for the national grid to absorb it in and efficient way.
This requires a huge amount of capital.
but the emphasis being put in this place, you are not only maintaining the level of business activitiesat an ideal level, but at the same time building out a stronger, more robust pass for the economy to grow in the long run.
>> Fascinating stuff. As always, at home, do your own research before making investment decisions. We'll get back to your questions for Alfred Li on the Chinese economy and markets in just a moment time. A reminder, of course, you get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
if you're examining a possible investment, taking a look at the company's financials can be a good place to start. You can find that data right here in WebBroker.
Nugwa Haruna, senior client education instructor TD Direct Investing has more.
>> By law, companies are required to produce their financial statementsand they will produce the statements quarterly and at the end of their fiscal year.
So there's three financial statements that investors can find in WebBroker and that would be the balance sheet, the income statement as well as the cash flow statement. So let's show investors how they can find these financial statements within WebBroker.
Once in WebBroker, investors would click on research.
Under investments, they would click on stocks. So investors can pull up whatever company they are interested in exploring further and once here, you can click on fundamentals and when financial statements.
Now, for investors who are looking to find the quarterly financial statements, they can do that by clicking on the tab that says interim, but if you're looking for annualized financial statements, you can do that by clicking on annualized.
So let's talk a little bit about these different financial statements. Starting off at the income statement, this is also known as the profit and loss statement, it gives investors an idea of what the financial performance of a company has been over particular period.
There is a balance sheet statement, this is essentially the network statement of the company. It gives investors an idea of the company's assets, which is what the company owns, the company's liabilities, which is what the company owes, as well as shareholder equity, so essentially how much investors have invested into the company.
Finally, there is the cash flow statements. The cash flow statement gives investors an idea of just how will the company manages its cash position. So is the company able to meet its debt obligations? As well as how well is able to run its operations. Now investors might ask, how is this relevant to me as an investor and how can I utilize this information?
Well, that is with the idea of ratio analysis comes into play.
Ratio analysis takes the information from these financial statements and then compares that on an industry basis or a company to company.
So investors were looking to do ratio analysis can do that by clicking on the industry comparison tab. We are going to focus on one ratio today.
We will scroll down and look at the current ratio.
The current ratio essentially is a liquidity measure.
It gives investors an idea of how well a company is able to meet its short-term liabilities, which would be any debts that are due within a year. Using short-term assets, so anything it owns that it can turn into cash within a year.
Now an investor would compare what the current ratio of the company is compared to the industry. If the current ratio is on par or slightly higher than the industry average, than that may be a good thing because it shows the company may be able to meet its debt obligations.
On the other hand, if an investor finds a current ratio is much lower than the industry average, it could be an indicator that the company may be at a higher risk of defaulting or may experience financial distress.
So essentially, when an investor is looking at things like the financial statements or ratio analysis, they can do this in WebBroker and then eventually look at how they can tie this information back to their investing strategy, whatever that may be.
>> Our thanks to Nugwa Haruna, senior client education instructor at TD Direct Investing.
And make sure to check out the Learning Center in WebBroker from our educational videos, live, interactive master classes and upcoming webinars.
Now before you back to your questions about the Chinese economy and markets for Alfred Li, a reminder how you get in touch with us.
Give a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us: you can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on webbroker.
just writing your question and hit send. We will see if one of our guest can get you your answer right here at MoneyTalk Live.
We are back now with Alfred Li taking your questions about the Chinese economy and markets.
This question came in it recently appeared what economic signal should we be watching for to get a good sense of China's true economic health?
>>that's a very good question.
It makes me recall about 10 years ago, we were actively looking at China's pork intake, port consumption per capita.
>> Really?
>> Or dairy intake for adults.
I think the answer is it depends.
Given the circumstances, the stage the Chinese economies develop into that.
But I think one thing to point out is that China is a very diversified, large economy. Therefore, this is the reason why we should look at a specific area to decide which indicator to use to track the development of those areas.
whether you're invested in tangible or real assets or equities.
I think at this moment, China's concentration or effort is mainly observable in two areas.
One is alternative energy, the other one is EVs. So taking these two industries as an example in terms of alternative energy. The alternative energy utilization ratio is another good indicator so we can predict whether it is overdone or whether the current pace is healthy or not. So when the EV side, obviously, we tend to look at new car sales and EV penetration.
So those are all good indicators of what that ratio should be tracking at this moment.
>> That's fascinating. 10 years to go from looking at 10 years ago consumption of pork products to see how healthy the economy was to EV sales.
How much opportunity in EVs and renewable energy is there in China? It sounds like there's some opportunity.
>> When you look at the EV value chain, the downstream is very competitive, given consumer acceptance of EV and the penetration has been expanding quite substantially.
We see in China, I think the latest number is approaching 30%, 26% is the latest number of EV sales as a percentage of total car sales.
As a result of this, previously traditional carmakers have their own plans in terms of gradual adoption and entry of an EV, they are standing by to watch and control the pace.
But now in order to protect their value and market share, they are all rushing into the industry. And there is not much hurdle for either traditional carmakers or the new entrance to start to compete in these lower downstream of the industry. But in the upstream, you can see that lithium production and reserves are quite limited to a few countries in the technology, in order to refine and produce the battery material, there is a high level technology barrier for newcomers to start to enter into the competition. There is also the economics of scale, which is a huge hurdle.
A company has to be able to operate in different geographies in order to achieve scale and to be a valuable player in the upstream.
So currently, given all of these situations, we consider the upstream to be a better position in the EV value chain.
The battery manufacturer in the middle is also a viable area to make a good investment because this is a smaller competition with a few global leaders taking most of the market share and there is also rapid technology iteration that those players are conducting through their own R and D and given the strong outlook, so those players in the upstream are concentrated players who have strong hurdle protection in terms of the scale and technology know-how. They should be able to benefit more from this trend than the downstream players.
>> Fascinating stuff. As always, at home, make sure to do your own research before you make any investment decisions.
Let's get more of your questions now. What is China doing to compete with other low cost manufacturing bases like Vietnam?
>> What China is trying to do as part of the modernization with Chinese characteristic approach is obviously close up the living standard between people living in different geographies within China.
This approach resulted in the creation of 60 more urban clusters in addition to the current three main urban areas or metropolitan carriers and the three current main metropolitan areas are Beijing and Shanghai, which is called… Bay area. The other one is well-known, which is the area surrounding Shanghai.
Then there is the Pearl River Delta.
The 60 more urban clusters are located all across China. For example, in the midstream area around Wuhan, there is a new urban cluster being created along the river around the cities of… Is another urban cluster.
If you compare the labour costs in the… City, it's quite comparable to the level you would experience in Vietnam.
But the… City and together with the Chengdu together, it has nearly 40 million population, which is about more than the urban population of Vietnam.
But this area, with large-size operation, large-size workforce, is also supported byChina's transportation network and infrastructure, connecting China with the rest of the region, continent.
There is a real road that stretches over 11,000 km, connecting challenging to about 100 cities across the Eurasian continent, all the way to the Hamburg Port in Germany.
The two cities are also well supported by the supply chains across different industries, and therefore Chung Cheng now becomes China's new frontier in terms of rapid economic growth.
>> Fascinating stuff. Great perspective. We are going to get back to your questions were offered the on the Chinese economy and markets in just a moment time. As always, make sure you do your own research before you make any investment decisions and a reminder that you can get in touch with us at any time.
Do you have a question about investing or withdrawing the markets? Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com, or you can use the question box right below the screen here in WebBroker. Just writing your question and hit send.
We will see if one of our guests can get you your answer right here at MoneyTalk Live.
Whether you're ready for it or not, the holiday shopping season is on the way. The US Thanksgiving has led to Black Friday and cyber Monday. Billions were spent over the holiday weekend for Americans and here at home as well. The question is, does that spending hold up while we grapple with high inflation and soft consumer sentiment. Anthony Okolie it has been digging into a new report about this.
>> As you mentioned, I think the big question is will US retailers be able to attract Americans to shop with big discounts and encourage them to open their wallets?
Based on early data, Americans spent an unprecedented amount.
On Thursday, consumers spent a record $5.3 billion, that's up 5% year-over-year. Black Friday sales, they recorded 9 billion in sales.
so Americans have been spending. That is held by red-hotjob market.
Popular products, a lot of electronics, Apple Mac, watches, drones, X boxes, video games according to Adobe analytics. However TD Economics is that given the fact that retail sales trending has generally been higher this year versus pre-pandemic, but when you look compared to past years, sales are actually largely being lifted by inflation. I brought along a chart that kind of compares nominal retail sales versus retail sales adjusted for inflation. It as you can see, nominal retail sales is going up higher but adjusted for inflation, the bars have been moving sideways since mid-2021.
Another headwind that retailers are facing is higher interest rates and that is raising consumer debt costs.
Many Americans are putting more of their purchases on their credit cards and there is a report that came out by the New York Fed which showed that US households increased debt at the fastest pace in 15 years as credit card use has increased. Another thing that Americans have been doing particularly over the Thanksgiving day holiday is that they are using what is called turning to buy now, pay later orders which is up week over week and this allows shoppers to pay through interest-free instalments.
While the data points over US Thanksgiving and Black Friday points to solid online shopping, which approximately is 3%, that increases pretty modest when compared to previous years whereSales have jumped between 10 to 14%. And of course, I brought along a chart that shows online shopping is actually given up some ground to brick-and-mortar stores over the past year versus the pandemic peak in 2020. As the chart shows, online shopping is down from a record high of about 16% in the first quarter of 2022 around 15% in the past year. Still above pre-pandemic levels but again, narrowing over time.
While we still have some shopping days ahead, It's a little too early to judge how the 2022 holiday shopping season will stack up to previous years.
Greg?
>>obviously, money was spent this weekend as you alluded to. Some of it was borrowed money, but still, I even went into the store. This is rare for me, I went into a store on Sunday. What about the rest of the holiday season? It started off with a bang. What does TD Economics think about where we go from here?
>> TD Economics expects that this year will be underwhelming as shoppers are getting less bang for their buck and TD Economics actually expect retail sales, excluding gas, autos, restaurants and building material, to rise about 6% year-over-year during the holiday season between October to December and that's again down from previous years.
They point to the fact that inflation is running hot and sales will largely be propped up by higher prices rather than increase volume.
>> Thinks that, Anthony.
> My pleasure.
>> MoneyTalk Anthony Okolie. We had some burning questions in there.
Let's take a look at what's happening on the market. We will start here at home on Bay Street with the TSX Composite Index. The first trading day of the week.
We are down96 points, a little less than half a percent right now.
Interesting about crude, really pulled back sharply this morning. Of course, over the weekend, the COVID protest, but of uncertainty for the markets. West Texas intermediate, the American benchmark on the screen right now, up more than a full percent. It's got some of the energy stocks off of their lows this session.
Cenovus down about 1.3%.
Alimentation Couche-Tard was making some headway to the upside earlier in the session at 6197, it's up almost 2%. South of the border, let's check in on the S&P 500.
Still a bit of a cautious tone out there, down 33 points, a little less than a full percent.
The tech heavy NASDAQ, how is it stacking up against the broader market right now?
You much the same. A few basis points difference. An apple, of course, with this protest in China, concerns about COVID, there have been some concerns about iPhone production that have weighed on the name.
Trading 145 bucks and change, it's down a modest 1.
8%.
We are back now with Alfred Li from TD Asset Management.
Let's back to your questions. What's the outlook for China's relations with Taiwan?
>> This obviously has a long history to this story.
So without touching on that, I think on a going forward basis, I do not expect any escalation of the situation there from this point on, given that I think the Chinese authorities contention is certainly to unite the populations as opposed to get the island back, so to speak.
Another thing is the intensive area plan, the 20th party Congress and also Xi Jinping's third term all indicates that there is a very ambitious goals that will be achieved rather than-- other than the regional tension that the country needs to take care of. So I think in order not to jeopardize the grand future that the authorities trying to create for the population, I think the status quo is the most likely outcome for the years to come.
>> We are out of time for viewer questions but a lot of interest in you being here, Alfred. Final thoughts, as investors, what should we be thinking about the Chinese economy heading into 2023?
>> Heading into 2023, I think certainly there will be slow-paced consumption recovery, given that the COVID or dynamic zero COVID policy has to be gradually loosened.
The authority need to find a reasonable path until they fully reopen, but obviously, the early indicator is promising but it has caused some frustration because of the back-and-forth. So that also tells us that this is a situation that needs time to progress.
On the global trade perspective… Because of the weakening of the global economy, global demand in terms of fixed asset formation. It's reasonable to expect a soft landing in the real estate sector, given that all of the financial direct aid that is provided for unfinished projects to be completed and the remaining players to operate in a better, more healthy rate.
The investment in traditional infrastructure and the new infrastructure and R&D spending will continue to expand in a rapid pace. So overall, all of these things included, it's reasonable to expect 4 to 5% growth into 2023 the Chinese economy.
>> Alfred, it's great to have you here and get your insights. I know you're not Toronto all the time, you're based in Hong Kong, so it was great for you to come in net.
Our thanks Alfred Li, co-lead for international equity at TD Asset Management. Stay tuned, tomorrow show, Andrew Kelvin, chief Canada strategist at TD Securities is going to be our guest. He wants to take your questions about the Canadian economy and interest rates. December is just around the corner, we have a decision coming from our central bank, the Bank of Canada. Lots to talk about. A reminder, you get a head start with your questions. Email moneytalklive@td.com.
That's all the time we have the show today. Thanks for watching.
We will see you tomorrow.
[music]
Every day, I'll be joined by guests from across TD, many of whom you'll only see here.
We'll take you through its moving the markets and answer your questions about investing. Coming up on statio, we are going to discuss the outlook for China's economy as it grapples with rising COVID cases with TD Asset Management Alfred Li. And in today's WebBroker education segment, Nugwa Haruna is going to show us how you can find a company's financial statements using this platform.
So here's how you can get in touch with us. Just email moneytalklive@td.com or you can salute that viewer response box right on the video player here on WebBroker.
Before we get to our guest today, let's get you an update on the market action. The Americans are back at it full speed after last week's Thanksgiving holiday.
There was no trading on Thursday, half day on Friday, so everyone's back in the game today.
You do have some concerns about what's happening in China right now with the rise in COVID cases, some of the process putting a bit of caution into the markets, 20,296, got the TSX here at home on Bay Street down a little less than half a percent.
Oil took a heads earlier today but it's recovered modestly. I want to check in on some of the energy names which were under pressure. We still have some core to the downside but it 4675, it's down a fairly modest 1 1/3%. West Texas Dominion crude up a little more than half a percent after a fairly sizable drop in the earlier hours this morning.
Shopify off the back the big shopping weekend, of course, Thanksgiving in the states gives way to Black Friday, cyber Monday. Shopify reporting it did see a 17% increase in sales over the weekend compared to earlier periods and that stock is up to the tune of 3.7%. South of the border, let's check in on the broader read of the American market, the S&P 500.
A bit of caution here as well, down 32 points, a little shy of a full percent. Tech heavy NASDAQ, want to see how it stacking up against the broader market.
But the NASDAQ down about three quarters of a percent, sort of matching pace.
And Exxon, another big energy name is said to the border, but pressure here but not quite as dramatic as it was earlier in the session, hundred and 11 bucks and change, down a little shy of 2%. That's a market update.
Investors are keeping a careful eye on searching COVID cases and growing frustration with lockdowns in China.
aand of course, this all has big implications for the global economy. For more on this, we are joined now by Alfred Li, co-lead for international equity at TD Asset Management.
Great to have you on the program.
You are here in North America, usually based in Hong Kong, it's a pleasure to have you here.
>> It's a pleasure to be here.
>> Let's talk that some of the headlines that investors have been digesting over the weekend, there has been unease in China due to the lockdowns. How is this view from an investment perspective?
>> I think this actually indicatesthe beginning of an improving of the situation. Obviously, after the 20th CCP National Congress, guidelines were issued essentially calling for regulatory loosening of the zero COVID policy, but this is a trial approach.
China is taking baby steps in order to makesure that things are progressing without causing additional risk to the population.
Obviously, these have made people become more optimistic for a more sensible opening up.
But with the two steps forward and one step back, the situation is not progress as hoped. Potentially some frustration has emerged.
But I think if you look at the policy aspect, the number of cases achieved were reached during the day has already… Arrived in the last episode in Shanghai, last April, but we have much higher percentage of new cases that have no symptoms and we have only five death cases compared to north of 500 last time around, so that means either herd immunity has somehow been established in the community or the past two years of dynamic lockdown, or the Chinese vaccines have better efficacy than people suspected.
So I think we are on the right track, but it's a process.
>> So adjusting things, as all of this unfold in real time, what should we be thinking in terms of the application for the Chinese economy? Because there has been concern about the surgeon cases. You say there's a reason for optimism out there. So what does it actually mean for the growth for China to achieve there?
>> I think, obviously, the consumption recovery is going to take time, because the Chinese government will probably adopt a very slow approach. Over the last two, three years there have only been five cases in this track record is what the Chinese authorities meant to keep.
So at the tail end of this disaster, they want to make sure that the whole economy, the whole population gets through all of it smoothly. So they are expecting about four, 5% growth in consumption in 2023, in the early part of 23. This is a gradual or slight improvement from this year's level. At the same time, what's going to support the economy to continue to expand is going to continue to be a traditionalasset formation and also new infrastructure investmentwhich lets factories grow to 68% level.
The last sector, we can now safely… Achieved the soft landing… Jointly issued policies urging both policy banks and commercial banks to provide direct financing to projects that are yet to be completed so that the developers in trouble, their underlying assets are not going to have to spill over to the broader economy.
At the same time, the credits and financial supports are being provided to the remaining players in the industry so that they can remain functional, as they should, given their disciplined balance sheet and their capacity or their capability to continue to operate.
On the other side, we can expect some headwinds given the expected deterioration in the global economy as the market for Chinese exports diminishes. We are expecting mild improvement from the current year's number or level for the Chinese economy of GDP growth to achieve about four or 5% per annum growth in real terms.
>> So it's a possible cattle is there for the economy into the next year but perhaps some challenges as well when you talk with the global economy.
What about the Asia-Pacific economic cooperation summit? What did we glean from that?
>> Activities that Xi Jinping has done.
so the G 20 is automatically followed by the APEC meeting.
over the course, Xi Jinping and a group of world leaders from the developed world and from developing countries across different regions, if he puts these meetings and four, five groups, firstly, I think most noticeable is Xi Jinping's meeting with Joe Biden.
I think this is sending a very positive signal to the world market given that the two leaders mutually agreed on that they should continue to curb… Inflation, conflict and focus on an area that the two countries can work together while at the same time acknowledging, especially from the US side, that China is the competition that they are going to compete against going forward.
With European leaders, Xi Jinping had a constructive discussion with the German counsellor, with the French prime minister, with the leaders from the Netherlands, Italy. These four leaders, essentially, the message coming out of the meeting indicating that China's stance is essentially to urge or to ask the countries to say independent in terms of making policy decisions and making decisions based on their past benefit for their economy perspective.
With the group of leaders or the developed countries in the Asia-Pacific region, mainly Japan, South Korea, Australia and New Zealand, the message from there and both sides bilaterally agreed on mainly not to interfere with geopolitical tensions, bilateral economic collaborations and international trades between China and those countries.
So these maintaining, containing conflict and developing economic collaboration and promote international trades are the main themes with this group of countries.
The fourth group is the with developing country is, we seen in the Asia-Pacific region, particularly Southeast Asian countries,Those are more close alliance with China, they are mostly… There are more broad-based collaboration between China and those countries in terms of transportation networks ranging from railroads to… And also direct investments from China into those countries across different industries, and also the rapidly expanding global or international trades between businesses in these countries.
Collectively, our CDP or Asian countries account for China's number one trading partner around the globe, so these groups with huge populations and rapid growth, economic growth, but from a relatively low base, obviously, it is what China is trying to cultivate going forward as the main both a main source of economic growth and international cooperation.
>> Fascinating insights on the region and a great start to the program. We can have a lot more coming up.
We're going to get your questions about China's economy and the markets up for Alfred Li and just moments time.
Our minor, of course, you can have with us any time.
Just email moneytalklive@td.com or Philadelphia response box right under the video player on the broker.
Right now though, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading.
Casino stocks are in the spotlight today, that after China granted provisional licenses for several of the biggest names in the gaming industry to keep operating in Macau.
the news initially sent names such as Wynn Resorts, Las Vegas Sands and MGM Resorts higher in the premarket, but the trading activity has been a little more mixed in today's session.
Canada's largest banks are on deck to report quarterly earnings this week.
Rising interest rates are generally favourable for a bank's net interest margins,and there were to be a key focus for investors. The market will also be watching provisions for loan losses amid all these warnings about a possible recession next year.
Shares of Credit Suisse continue to skirt record lows in the wake of a massive outflow of investor cash.
Concerns over the health of Switzerland's largest bankis also affecting its debt, with its bonds falling and the cost of insuring its debt against default on the rise. Just last week, Credit Suisse warned it could book a pretax loss of some $1.5 billion in the fourth quarter.
It let's check in on the market, we will start here at home on Bay Street with the TSX Composite Index.
We saw cautious start to the trading week. Oil is off of it the lows of the session, actually looking into positive territory and taking some of the Pressure off but it's still down. It down 104 points, little more than half a percent.
check in on the S&P 500, the broader read of the American market, and that they are back from the holiday weekend, backfill scene.
42 points for the downside of the S&P 500, a little more than 1% to the downside.
We are back now is Alfred Li and we are taking your questions about the Chinese economy and markets. To look after them. First off the top, what are yourThoughts on China's housing market?
>> I think China's housing market certainly has… In the past 23 years due to the continuous downturn or decline.
There are many nuances to it.
Firstly, the Chinese population has been approaching the peak, and the Chinese labour force actually has peaked out all the way back in 2010.
The median age of the Chinese population is now approaching 40.
All of these points affect that there should be a slowdown in the retail asset industry.
But before the Chinese government starts to deflate the bubble before it further expands, the industry, especially some of the more aggressive players, have been continuously aggressively leveraging their balance sheet and intensifying their activities, so this triggered the government's preemptive action against the sector.
What I see with this development is it provides a opportunity for Chinese households who need to start to diversify their wealth among different asset classes.
Presently, more than 60% of Chinese household wealth is in real estate while 2% is invested in equities.
so the longer-lasting stagnation of home prices, that will trigger the household to start to diversify their investment and certainly, thirdly, the capital flow, this is an opportunity for capital flow to start to invest in areas that can generate more high-impact value for the economy.
As we just mentioned, the previous two decades, the Chinese economy has been mainly driven by the labour force expansion and relatively lower labour costs.
This is essentially what you can call the globalization model.
But as the labour force starts to shrink, although there is still human capital continuing to grow given higher education and overall labour force is demonstrating, but China certainly needs more or being able to more efficiently leverage on more broader based factors to continue to propel the economy, namely technology innovation, traditional, physical infrastructure,new infrastructure in terms of IT networks, big data and the environment and cultural environment to retain top talent. Those are all areas that China is trying to fill up in order to generate better efficiency, better activity from the marginal input perspective.
So I think those are all related to the decline of real estate as the single largest asset class within China.
>> Very interesting analysis there of China's housing market and where it might be moving toward. We mention briefly the 20th party Congress off the top of our chat but we have of you are now wondering what were some of your big takeaways from the 20th Party Congress from the perspective of the economy?
>> I think the major signal or the new slogan that came out from the 20th party Congress is the modernization in Chinese style work with Chinese characteristics. This is a very broad concept that covers not only economic aspect of China but also includes social development, governance, legislation and law enforcement, environmental protection and expansion of the cultural environment. This relates to the economic interpretation of this process or planning. His ultimate goal is continuously used to be… This is also the latest iteration of what the Chinese government has at the centre of its effort over the past decades.
Essentially, common prosperity traces back tothe pursuit of equality at the beginning.
And now with the gradually cumulation of wealth, we have seen the Chinese economy, the meaning of prosperity now refers to a broader concept, including for the population, for example your choice of career, your living environment, your welfare, your healthcare system, your ability. The comment refers to also continuously the equal distribution or equal access of the population to those items. In order to achieve that in modernization, therefore, is a very systematic approach ranging from, for example, ranging from made in China 2025, emphasizing on continuing to build out a strong impact of industry within the Chinese economy with the emphasis of revitalization of the rural areas in order to reduce the inequality between the rural population and the urban population. There is also thefocus on the power transmission system which is also put in place in part to narrow the gap, the economic development gap between the hinterland and the coastal areas of China.
So this is how all the new development that came out from the 20th party Congress.
>> A lot there but no better person to break it down for us than you, Alfred. We'll get another question. So much talk this year about inflation and global central banks. Someone to get your outlook onthe People's Bank of China.
What are you seeing?
>> The Chinese economy has been able to maintain… You're seeing 9% inflation in Europe and 8% inflation in the United States. The reason for the Chinese inflation to stay at a relatively lower level, obviously, is we can trace this back to the PPBC use's reluctance to overstretch its balance sheet. There is no flooding of money into the system. There is no helicopter money took place over the past three years during the pandemic. Instead, with the central bank is trying to do, they already have so many shovel ready projects and modernization with Chinese characteristics umbrella so they can more process the direct flow into those areas ranging from alternative energy including solar and wind power, there is integrated power generation being built out in the West North part of China, integrating hydropower, wind power, solar power in the traditional coal power together in order to make sure the outputs of integrated power facility is smooth in order for the national grid to absorb it in and efficient way.
This requires a huge amount of capital.
but the emphasis being put in this place, you are not only maintaining the level of business activitiesat an ideal level, but at the same time building out a stronger, more robust pass for the economy to grow in the long run.
>> Fascinating stuff. As always, at home, do your own research before making investment decisions. We'll get back to your questions for Alfred Li on the Chinese economy and markets in just a moment time. A reminder, of course, you get in touch with us any time. Just email moneytalklive@td.com.
Now, let's get our educational segment of the day.
if you're examining a possible investment, taking a look at the company's financials can be a good place to start. You can find that data right here in WebBroker.
Nugwa Haruna, senior client education instructor TD Direct Investing has more.
>> By law, companies are required to produce their financial statementsand they will produce the statements quarterly and at the end of their fiscal year.
So there's three financial statements that investors can find in WebBroker and that would be the balance sheet, the income statement as well as the cash flow statement. So let's show investors how they can find these financial statements within WebBroker.
Once in WebBroker, investors would click on research.
Under investments, they would click on stocks. So investors can pull up whatever company they are interested in exploring further and once here, you can click on fundamentals and when financial statements.
Now, for investors who are looking to find the quarterly financial statements, they can do that by clicking on the tab that says interim, but if you're looking for annualized financial statements, you can do that by clicking on annualized.
So let's talk a little bit about these different financial statements. Starting off at the income statement, this is also known as the profit and loss statement, it gives investors an idea of what the financial performance of a company has been over particular period.
There is a balance sheet statement, this is essentially the network statement of the company. It gives investors an idea of the company's assets, which is what the company owns, the company's liabilities, which is what the company owes, as well as shareholder equity, so essentially how much investors have invested into the company.
Finally, there is the cash flow statements. The cash flow statement gives investors an idea of just how will the company manages its cash position. So is the company able to meet its debt obligations? As well as how well is able to run its operations. Now investors might ask, how is this relevant to me as an investor and how can I utilize this information?
Well, that is with the idea of ratio analysis comes into play.
Ratio analysis takes the information from these financial statements and then compares that on an industry basis or a company to company.
So investors were looking to do ratio analysis can do that by clicking on the industry comparison tab. We are going to focus on one ratio today.
We will scroll down and look at the current ratio.
The current ratio essentially is a liquidity measure.
It gives investors an idea of how well a company is able to meet its short-term liabilities, which would be any debts that are due within a year. Using short-term assets, so anything it owns that it can turn into cash within a year.
Now an investor would compare what the current ratio of the company is compared to the industry. If the current ratio is on par or slightly higher than the industry average, than that may be a good thing because it shows the company may be able to meet its debt obligations.
On the other hand, if an investor finds a current ratio is much lower than the industry average, it could be an indicator that the company may be at a higher risk of defaulting or may experience financial distress.
So essentially, when an investor is looking at things like the financial statements or ratio analysis, they can do this in WebBroker and then eventually look at how they can tie this information back to their investing strategy, whatever that may be.
>> Our thanks to Nugwa Haruna, senior client education instructor at TD Direct Investing.
And make sure to check out the Learning Center in WebBroker from our educational videos, live, interactive master classes and upcoming webinars.
Now before you back to your questions about the Chinese economy and markets for Alfred Li, a reminder how you get in touch with us.
Give a question about investing or what's driving the markets? Our guests are eager to hear what's on your mind, so send us your questions. There are two ways you can get in touch with us: you can send us an email anytime at moneytalklive@td.com or you can use the question box right below the screen here on webbroker.
just writing your question and hit send. We will see if one of our guest can get you your answer right here at MoneyTalk Live.
We are back now with Alfred Li taking your questions about the Chinese economy and markets.
This question came in it recently appeared what economic signal should we be watching for to get a good sense of China's true economic health?
>>that's a very good question.
It makes me recall about 10 years ago, we were actively looking at China's pork intake, port consumption per capita.
>> Really?
>> Or dairy intake for adults.
I think the answer is it depends.
Given the circumstances, the stage the Chinese economies develop into that.
But I think one thing to point out is that China is a very diversified, large economy. Therefore, this is the reason why we should look at a specific area to decide which indicator to use to track the development of those areas.
whether you're invested in tangible or real assets or equities.
I think at this moment, China's concentration or effort is mainly observable in two areas.
One is alternative energy, the other one is EVs. So taking these two industries as an example in terms of alternative energy. The alternative energy utilization ratio is another good indicator so we can predict whether it is overdone or whether the current pace is healthy or not. So when the EV side, obviously, we tend to look at new car sales and EV penetration.
So those are all good indicators of what that ratio should be tracking at this moment.
>> That's fascinating. 10 years to go from looking at 10 years ago consumption of pork products to see how healthy the economy was to EV sales.
How much opportunity in EVs and renewable energy is there in China? It sounds like there's some opportunity.
>> When you look at the EV value chain, the downstream is very competitive, given consumer acceptance of EV and the penetration has been expanding quite substantially.
We see in China, I think the latest number is approaching 30%, 26% is the latest number of EV sales as a percentage of total car sales.
As a result of this, previously traditional carmakers have their own plans in terms of gradual adoption and entry of an EV, they are standing by to watch and control the pace.
But now in order to protect their value and market share, they are all rushing into the industry. And there is not much hurdle for either traditional carmakers or the new entrance to start to compete in these lower downstream of the industry. But in the upstream, you can see that lithium production and reserves are quite limited to a few countries in the technology, in order to refine and produce the battery material, there is a high level technology barrier for newcomers to start to enter into the competition. There is also the economics of scale, which is a huge hurdle.
A company has to be able to operate in different geographies in order to achieve scale and to be a valuable player in the upstream.
So currently, given all of these situations, we consider the upstream to be a better position in the EV value chain.
The battery manufacturer in the middle is also a viable area to make a good investment because this is a smaller competition with a few global leaders taking most of the market share and there is also rapid technology iteration that those players are conducting through their own R and D and given the strong outlook, so those players in the upstream are concentrated players who have strong hurdle protection in terms of the scale and technology know-how. They should be able to benefit more from this trend than the downstream players.
>> Fascinating stuff. As always, at home, make sure to do your own research before you make any investment decisions.
Let's get more of your questions now. What is China doing to compete with other low cost manufacturing bases like Vietnam?
>> What China is trying to do as part of the modernization with Chinese characteristic approach is obviously close up the living standard between people living in different geographies within China.
This approach resulted in the creation of 60 more urban clusters in addition to the current three main urban areas or metropolitan carriers and the three current main metropolitan areas are Beijing and Shanghai, which is called… Bay area. The other one is well-known, which is the area surrounding Shanghai.
Then there is the Pearl River Delta.
The 60 more urban clusters are located all across China. For example, in the midstream area around Wuhan, there is a new urban cluster being created along the river around the cities of… Is another urban cluster.
If you compare the labour costs in the… City, it's quite comparable to the level you would experience in Vietnam.
But the… City and together with the Chengdu together, it has nearly 40 million population, which is about more than the urban population of Vietnam.
But this area, with large-size operation, large-size workforce, is also supported byChina's transportation network and infrastructure, connecting China with the rest of the region, continent.
There is a real road that stretches over 11,000 km, connecting challenging to about 100 cities across the Eurasian continent, all the way to the Hamburg Port in Germany.
The two cities are also well supported by the supply chains across different industries, and therefore Chung Cheng now becomes China's new frontier in terms of rapid economic growth.
>> Fascinating stuff. Great perspective. We are going to get back to your questions were offered the on the Chinese economy and markets in just a moment time. As always, make sure you do your own research before you make any investment decisions and a reminder that you can get in touch with us at any time.
Do you have a question about investing or withdrawing the markets? Our guests are eager to hear what's on your mind, so send us your questions.
There are two ways you can get in touch with us. You can send us an email anytime at moneytalklive@td.com, or you can use the question box right below the screen here in WebBroker. Just writing your question and hit send.
We will see if one of our guests can get you your answer right here at MoneyTalk Live.
Whether you're ready for it or not, the holiday shopping season is on the way. The US Thanksgiving has led to Black Friday and cyber Monday. Billions were spent over the holiday weekend for Americans and here at home as well. The question is, does that spending hold up while we grapple with high inflation and soft consumer sentiment. Anthony Okolie it has been digging into a new report about this.
>> As you mentioned, I think the big question is will US retailers be able to attract Americans to shop with big discounts and encourage them to open their wallets?
Based on early data, Americans spent an unprecedented amount.
On Thursday, consumers spent a record $5.3 billion, that's up 5% year-over-year. Black Friday sales, they recorded 9 billion in sales.
so Americans have been spending. That is held by red-hotjob market.
Popular products, a lot of electronics, Apple Mac, watches, drones, X boxes, video games according to Adobe analytics. However TD Economics is that given the fact that retail sales trending has generally been higher this year versus pre-pandemic, but when you look compared to past years, sales are actually largely being lifted by inflation. I brought along a chart that kind of compares nominal retail sales versus retail sales adjusted for inflation. It as you can see, nominal retail sales is going up higher but adjusted for inflation, the bars have been moving sideways since mid-2021.
Another headwind that retailers are facing is higher interest rates and that is raising consumer debt costs.
Many Americans are putting more of their purchases on their credit cards and there is a report that came out by the New York Fed which showed that US households increased debt at the fastest pace in 15 years as credit card use has increased. Another thing that Americans have been doing particularly over the Thanksgiving day holiday is that they are using what is called turning to buy now, pay later orders which is up week over week and this allows shoppers to pay through interest-free instalments.
While the data points over US Thanksgiving and Black Friday points to solid online shopping, which approximately is 3%, that increases pretty modest when compared to previous years whereSales have jumped between 10 to 14%. And of course, I brought along a chart that shows online shopping is actually given up some ground to brick-and-mortar stores over the past year versus the pandemic peak in 2020. As the chart shows, online shopping is down from a record high of about 16% in the first quarter of 2022 around 15% in the past year. Still above pre-pandemic levels but again, narrowing over time.
While we still have some shopping days ahead, It's a little too early to judge how the 2022 holiday shopping season will stack up to previous years.
Greg?
>>obviously, money was spent this weekend as you alluded to. Some of it was borrowed money, but still, I even went into the store. This is rare for me, I went into a store on Sunday. What about the rest of the holiday season? It started off with a bang. What does TD Economics think about where we go from here?
>> TD Economics expects that this year will be underwhelming as shoppers are getting less bang for their buck and TD Economics actually expect retail sales, excluding gas, autos, restaurants and building material, to rise about 6% year-over-year during the holiday season between October to December and that's again down from previous years.
They point to the fact that inflation is running hot and sales will largely be propped up by higher prices rather than increase volume.
>> Thinks that, Anthony.
> My pleasure.
>> MoneyTalk Anthony Okolie. We had some burning questions in there.
Let's take a look at what's happening on the market. We will start here at home on Bay Street with the TSX Composite Index. The first trading day of the week.
We are down96 points, a little less than half a percent right now.
Interesting about crude, really pulled back sharply this morning. Of course, over the weekend, the COVID protest, but of uncertainty for the markets. West Texas intermediate, the American benchmark on the screen right now, up more than a full percent. It's got some of the energy stocks off of their lows this session.
Cenovus down about 1.3%.
Alimentation Couche-Tard was making some headway to the upside earlier in the session at 6197, it's up almost 2%. South of the border, let's check in on the S&P 500.
Still a bit of a cautious tone out there, down 33 points, a little less than a full percent.
The tech heavy NASDAQ, how is it stacking up against the broader market right now?
You much the same. A few basis points difference. An apple, of course, with this protest in China, concerns about COVID, there have been some concerns about iPhone production that have weighed on the name.
Trading 145 bucks and change, it's down a modest 1.
8%.
We are back now with Alfred Li from TD Asset Management.
Let's back to your questions. What's the outlook for China's relations with Taiwan?
>> This obviously has a long history to this story.
So without touching on that, I think on a going forward basis, I do not expect any escalation of the situation there from this point on, given that I think the Chinese authorities contention is certainly to unite the populations as opposed to get the island back, so to speak.
Another thing is the intensive area plan, the 20th party Congress and also Xi Jinping's third term all indicates that there is a very ambitious goals that will be achieved rather than-- other than the regional tension that the country needs to take care of. So I think in order not to jeopardize the grand future that the authorities trying to create for the population, I think the status quo is the most likely outcome for the years to come.
>> We are out of time for viewer questions but a lot of interest in you being here, Alfred. Final thoughts, as investors, what should we be thinking about the Chinese economy heading into 2023?
>> Heading into 2023, I think certainly there will be slow-paced consumption recovery, given that the COVID or dynamic zero COVID policy has to be gradually loosened.
The authority need to find a reasonable path until they fully reopen, but obviously, the early indicator is promising but it has caused some frustration because of the back-and-forth. So that also tells us that this is a situation that needs time to progress.
On the global trade perspective… Because of the weakening of the global economy, global demand in terms of fixed asset formation. It's reasonable to expect a soft landing in the real estate sector, given that all of the financial direct aid that is provided for unfinished projects to be completed and the remaining players to operate in a better, more healthy rate.
The investment in traditional infrastructure and the new infrastructure and R&D spending will continue to expand in a rapid pace. So overall, all of these things included, it's reasonable to expect 4 to 5% growth into 2023 the Chinese economy.
>> Alfred, it's great to have you here and get your insights. I know you're not Toronto all the time, you're based in Hong Kong, so it was great for you to come in net.
Our thanks Alfred Li, co-lead for international equity at TD Asset Management. Stay tuned, tomorrow show, Andrew Kelvin, chief Canada strategist at TD Securities is going to be our guest. He wants to take your questions about the Canadian economy and interest rates. December is just around the corner, we have a decision coming from our central bank, the Bank of Canada. Lots to talk about. A reminder, you get a head start with your questions. Email moneytalklive@td.com.
That's all the time we have the show today. Thanks for watching.
We will see you tomorrow.
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