Haining Zha

[music] > Hello, I'm Greg Bonnell. Welcome to MoneyTalk Live, brought to 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 what's moving the market and answer questions about investing. Coming up on today show, will discuss whether China can make an economic comeback this year as it eases COVID restrictions with TD Asset Management's Haining Zha. In today's WebBroker education segment, Jason Hnatyk will give us a primer on moving averages and how you can use on the fly from. plus, money talks Anthony Okolie will take us through a new call on the Canadian real stock from TD Securities. And here's how you get in touch with us, just email moneytalklive@td.com more selective your response box under the video player here on the burger. Before we get our guest for today, let's get you an update on the markets. Let's start here at home with the TSX Composite Index. It's a bit of a down day on either side of the border. You got the TSX 77 points in the hole, nothing too dramatic, a little more than 1/3 of a percent. A little risk appetite being taken off the table today, course, with all this economic data coming in and the Fed speakers that we've been hearing from recentlyseemingly staying the course when they are talking about raising rates and keeping them there for longer. There are some concerns in the market, there are fresh concerns, but they keep reemerging, but that the Fed will go a little too far and the economy will suffer due to this rate hiking cycle and will not get that soft landing. Taking a bit away from the risk appetite. Some names like Shopify here at home under pressure. You got Shopify at 5156, down about 2 1/2%. Did see some modest movement and some of the gold names, bear come on them again. It is modest, it is in the grain, 25 bucks and change and it's good for about a 2% jump today. South of the border, the S&P 500 under some pressure. Let's check in on that broader read of the American market. Almost a full percent to the downside, again, those concerns about the economy and what the Fed is going to do next. The tech heavy NASDAQ, let's check in on that when and how it is page against the broader market. A little more pain here, down 1 1/3%. Some of the big tech names, nothing too dramatic, but some downward pressure on these mega-cap tech names. Microsoft is down almost 2%, 231 bucks per share and change. And that's your market update. With the end of COVID lockdowns, China may be positioned for better growth this year, but they are also potential risks for the world's second-largest economy. Joining us now to discuss, Haining Zha, were fully manager with TD Asset Management. Great to have you here in the program. >> Great to be here. >> Let's talk about the outlook for the world's second-largest economy this year. There have been some pretty interesting moves from China in terms of their economy. How does it play out? >> Things are looking good. This is probably the first time in a while that stars align, no matter whether you look at COVID policy or government policy or regulatory policy, so they are both very supportive of the overall economy and economics. >> What is happening in the Chinese economy and China's leadership to have sort of changed course this way? It felt, correct me, it fell from my point of view a rather abrupt change in policy. Or was it a rather long time in coming? >> Today's, but the economic cost turned out to be too high if the zero COVID policy sustained for too long, so I think it's about the right time and the economy really need a big boost. And actually, the government is probably setting their target to be about 5% growth for 2023. > Let's talk about that, if that's the target. Can they achieve it with everything they are doing? COVID didn't go away in the country, it rather it was their approach to COVID that changed. Can they achieve that kind of growth this year? >> Definitely. There is a lot of potential, particularly on the consumption side. If you look at retail sales, right now the year-over-year growth in December is still negative, but the trend growth is somewhere around six or 7%. So there's a lot of potential for consumption to recover. And elsewhere in the investment space, and capital formation, I think the growth there would be roughly stable with the infrastructure investment would still provide, turn out to be another growth engine, it will be a little bit weaker on the real estate side. But on the manufacturing side driven by external demand weakening, there will be a little bit of a pressure. And same thing on the net export. There will be a little bit of drag that is expected, driven by weakening US and global economy. >> Now we have been so consumed in North America, Canada, the United States and Europe as well, with inflation, soaring inflation, trying to get it under control by tightening up the cost of capital. Is it a different situation in China? Are they dealing with the same inflationary problems or is it not really an issue for them? >> It's not really an issue for them. The inflation CPI is still below 2% and even after reopening, although people are expecting some kind of inflation pressure, but it will probably will mainly concentrate in energy, but not the general commodity complex. The reason why, as I mentioned, the real estate sector, the real estate investment trust probably is still going to remain big in 2023. >> That would be domestic inflation for China. There are concerns that as China reopens the economy and its appetite grows for what we have in Canada and other nations have, oil and other commodities, that they will drive global inflation higher. Is that a risk for the global economy, that China's appetite keeps us in an inflationary environment? >> Because it is concentrated in energy products, for example crude oil and natural gas, it's not so much for the commodity complex as a whole, which you see in the other parts of the global economy. >> Now what are the potential risks for China? Layout as a scenario here. As they open of the economy and ease up on COVID restrictions, what could trip them up in 2023? >> Yeah, the biggest drag, as I mentioned, is the external demand. As we know, in terms of manufacturing activity and goods consumption, things are slowing down in the US and the other developed economies. And as we know, China is a very export oriented economy. So that's the case, there will be some pressure on their export business. >> Longer term, as we look at the strength of the Chinese economy, it is the world's second-largest economy, they don't often see eye to eye with the world's largest economy, the United States. With the longer term prospects in China? What are their avenues for growth? >> Right, so if you break down the GDP growth, there are several components. One is population growth. On that, you see the 2022 is the first time that China has actually overall total negative population growth, although that amount is really small. The second component is the productivity growth. Productivity growth in China, I think, it would be the key because a large percentage of the population, they are young and they receive better education and they can provide better productivity. That's where the hope is. And on the capital formation side, in the past 10 years, there were a lot of investments. Nonetheless, there are some new areas, for example, 5G, data centres, there are new types of infrastructure that China could invest more to boost the overall productivity of the economy. >> Productivity is very important. We worry about it here and in other nations. You mention the population trends in China. I seen a lot of headlines about it recently, some people concerned about China's decelerating population growth. Is it something we need to be mindful of as investors or as China going to work through it? >> Right, we definitely need to be mindful, but I think the overall magnitude is not dramatic, at least for now. I think probably in the latter half of this decade, it might gradually accelerate, but it's a very long-term thing. But the key thing is, on the capital investment side and the boosting productivity side. >> Fascinating stuff and a great start to the program. We'll get to your questions about China's economy and markets for Haining Zha and just moments time. Including the outlook for China's real estate market, the tech sector and how things are looking from a valuation perspective. Of course, a reminder that you get in touch with us anytime at your questions. Just email moneytalklive@td.com or Philip the viewer a response box under the video player here only broker. Right now, let's say you updated on some of the top stories in the world of business and take a look at how the markets are trading. Proctor and Gamble is warning investors of the difficult cost and operating environmentfor the consumer goods it giant. Both sales and profits in its most recent quarter slid 1% compared to the same period last year. The company did report a 5% increase in organic sales, excluding the impact of currency fluctuations and other one-time items. Alcoa says higher input costs and lower prices for aluminum are hitting the bottom line. and the largest US aluminum producer is producing a sales forecast that is falling below the streets expectations. Alcoa says it's taking action to improve operations, including what it calls disciplined cost management. We have Netflix on deck to report its latest quarterly results after the closing bells today. Investors will be assessing several of the streaming joins a recent initiatives aimed at increasing profits, including its ad-supported tier of service. And of course, overall Netflix subscriber numbers will be a key focus and what has become a pretty competitive streaming market. Let's check in on the main benchmark indices. We'll start here at home on Bay Street with the TSX Composite Index. It's a bit of a down day on both sides of the border, pretty modest in Toronto. We're down we'll call that 71 point, a little bit more than 1/3 of a percent. And south of the border, persistent concerns, sort of like an ebb and flow over the last little while, about, okay, the US Federal Reserve needs to see a weakening economy so we can stop these aggressive rate hikes, but at the same time, as the economy weakens, investors start to worry about the economic impacts and of a possible recession this year. It seems that the fears about the Fed perhaps going too far have a greater economic impact may be at the forefront today, though you never know exactly what's behind these markets. The S&P 500 right now down 34 points, just shy of of a full percent. what are your thoughts about China's housing market? >>China's housing market will probably remain lacklustre in 2023. So if you look at various indicators, for example, the real estate and income it's still down about 10% year-over-year. So if you look at the housing sales, it's down more than 30% year-over-year and on top of that, if you look at the depositors survey, people's confidence or preference in buying a house is at record lows. So during the pandemic, during lockdown, many people lost their jobs and lost their income. So it will take some time for them to recover their confidence. >> I want to ask you about that, what the catalyst was behind this weakness in the property market. It seemed like a very strong space, but mostly comes down to economic conditions and the fact that the lockdowns are pretty tough on the workforce? >> Yeah, that's the number one reason and it probably exacerbated the amount of drop in the real estate market. But another key reason is the housing prices still remain very high and affordability, similar to Canada, is not very affordable for many people. And also, the overall demographic trends is not favourable for real estate anymore because you are seeing overall population plateau or even decline a little bit, and also you have a gradually aging population. All of these long-term factors are not supportive of dramatic increases in housing prices anymore. >> We know that in Canada, the housing market is a premium part of our economy. How important is the housing market to China's economy? >> It's very important. So if you look at real estate investment trust and all of the investment, it probably accounts for 20%. So if you look at it as a percentage of GDP, it's also very high, somewhere around 10 to 20%. So definitely will have a lot of impact on the overall economy. That's why the central bank realize that it has a systemic impact on the overall economy which is why at the end of last year, they actually, through guidance, injected some credit into the real estate sector. >> We've been sort of focusing mostly on residential in our conversation, but what about commercial? Has leadership in China encouraged that space or supported the commercial real estate space in the country? >> Right, the commercial space, as you can imagine, due to lockdown, is going to be very, very tough. If you look at the rent and occupancy rate, if you look at last year's data, it's not favourable. so yeah, they are equally challenged if not more challenged. >> Lots of questions coming into let's get to the next one. What economic signals should be watching to get a good sense of China's true economic health? >> Right, I think for 2023, I will focus on two types of indicators. Number one is the mobility type of indicator. For example, if you look at the Spring Festival travel, the upcoming Spring Festival trav and compared to 2019, it's probably still around 20% of the 2019 level. Looking at these kind of indicators can help you get a feeling of what is the recovery pace and will the economy gradually come back. The second type of indicator will look at is the retail sales. As I mentioned before, if Chinawants to achieve robust growth numbers or targets this year, one area that has to outperform is consumption. And right now, retail sales is very weak. I see a lot of upside potential in that once the economy reopen. >> The greater theme for China over the last several years, through reading and talking to people over the years, was them shifting from that manufacturing-based economy to a consumer-based economy. Where are they on that trajectory right now? >> Actually, it takes it back because of the lockdown because many people, again, lost their jobs and lost their income and they prefer to save more. But if you look at the excess savings accumulated during the pandemic, it is actually a pretty large amount over these three years. The excess savings is probably somewhere around 5 to 6 trillion RMB. That's a big amount. Although initially, after reopening, the consumer will be a lot more cautious in terms of spending their money, but over time, once the jobs and economy come back, they will feel more comfortable and that is where the potential is. >> The Chinese leadership is intent on seeing this, could be expected this falters for them to move in with any kind of incentives or supports that part of the economy to make sure he keeps growing? >> Actually, that already happened last year through the consumption voucher on the electronic platform and e-commerce. This year, that might continue because, as you mentioned, this is the area that they really want to focus on to make China a more domestic demand driven economy. > As always, at home, make sure you do your own research before making any investment decisions. We'll get back to your questions for Haining Zha on China's economy and markets in just a moment's time. A reminder that you get in touch with us anytime, just email moneytalklive@td.com. Now, let's get our educational segment of the day. Moving averages are one potential tool investors have to analyse a stock. Here on more about how they work and how you can utilize them on the WebBroker platform is Jason Hnatyk, client education instructor with TD Direct Investing. Great to see you. Walk us through it all. >> Great to be back. Thanks so much. So moving averages can be a key tool to identifying the trend of a particular investment you monitor or hold. Moving averages are a very useful tool commonly used to generate other indicators in the technical analysis world. So having a firm grasp on how they are calculated and other ways to use them is a key thing. Let's get into WebBroker so we can show how we can take best advantage of them. Up in the chart here, I've got a… Each candle here is for one day.. So maybe without giving anyone PTSD dating back to high school or elementary school math, let's dive into how the average is calculate. Will focus on the simple moving average here today. For instance, we have a 10 day moving average it will look at the closing prices of the 10 most recent handles, average them out and plot that point on the chart. As we move into time,this will be done over again. Let's get that onto the chart. These moving averages are located in the upper indicator section that is hear about the chart. Scroll down and find our simple moving average. It can be a very useful tool in helping identify the trend. There are other pieces of information on how this can be useful. We are looking to see is the stock crossing above or below the moving average? It is helping us identify, in addition to seeing how the candles are performing, where the moving average is going. It is trying to help confirm and make things easier to spot almost price charts. So to learn a little bit more about any study done on the chart, you will notice we have the steady name of the top left-hand corner. We go ahead and select the study. This is where we get a great description of the study but it also gives us the opportunity to adjust and customize the study so it meets our own personal needs. I'm going to go ahead and change moving average here on the chart. Let's go ahead and make that a short-term average of 20 candles. We can have an intermediate and long-term average. We can also use that opportunity. We can spot and identify trends over different lengths of time as well. So just like I spoke about, you were looking to see if the price chart crosses over the moving average. This gives us the opportunity to identify the trend of the short-term, long-term or midterm average and if they are crossing each other. So if the short-term average happens to be on top the other two, we may be in more of a bullish market. Conversely, if the averages are crossing over each other, it may give us other signals. Lots of information you get from the chart. >> It's a little bit tricky. once you get three simple moving averages on the board, you see them crossing over one another. So where do we go on the platform to learn about what these trading signals are trying to tell us? >> Right, that interpretation is the key detail. WebBroker doesn't leave you without some support. I'm going to bring you into a very useful area on the platform. If we go back up from where we are out of the chart here, if we select the technicals tab at the top here, this is going to bring us into an opportunity for us to have the website not only provide us with additional education but spots and technical patterns that are forming on the chart. So we are looking to learn about how to interpret particular signals from the technicals tab, we will choose the little graduation Here in the top right-hand corner. From here, we have different categories of different tactical signals. This is listed under the indicators tab. Here we have three different crossover points that are worth reading up on. Let's choose the price crosses moving average selection. Here we get to learn all about how it is formed, what it means. We have a picture to identify, so if you are looking to find these crossover points yourself on the chart, you are informed as to how it looks as will as some important trading considerations. One less thing to show the group here is that if you feel this particular indicator or crossover point is a useful trading signal, you can, from this point, start using our technical screener. So by clicking… All crossover points that involve the particular indicator your focus on. You can drill down from there. But this would be a good opportunity to find when this is happening and put into play. >> Good stuff as always. Thanks. >> Thank you. >> Jason Hnatyk, client education instructor at TD Direct Investing. Make sure to check out the learning centre in WebBroker for more educational videos, live, interactive master classes and upcoming webinars, such as five mistakes that may hinder an index investing plan. Before you get back your questions for Haining Zha, a reminder about how you can get in touch with us. Joe question about investing or was driving the market? I guess are eager to hear what's on your mind, so send us your questions. There are two ways to 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. a quick update on the markets. We will start the TSX Composite Index. Nothing too dramatic here at home, down 49 points, about 1/4 of a percent of the TSX. Let's check in on the S&P 500. Of course, it's a bit of a tricky situation at the start of the year, isn't it? We have been talking a lot about inflation, central bank actions that have been aggressive up to this point after the last several months. They are trying to bring inflation down. The big question becomes, as we see the signs of inflation easing, how aggressive will the US Federal Reserve continue to be? We are about two weeks after the next rate decision from the Fed. All we see, that will be a key one. There seems to be a bit of concern and perhaps chatter in the markets today about the fact that even though we are seeing some signs of inflation easing, the Fed officials who come out and give some pronouncements are beating the drum hawkish Lee on the need for getting rates up and leaving them there so a little bit of concern in the market on that front. Let's check in on the NASDAQ and see how it stacks up against the broader market. A little more weakness year, down a little bit more than 1% on that tech heavy index. We are back now with Haining Zha and taking your questions on China's markets. Can we get an update on the outlook for China's big tech firms? >> Right, the tech firms are actually great space to be when China reopens. So on that side, there are several positives. Number one, as we know, the regulatory policy action is in the process of wrapping up and largely over. And now, they are even turning on a bit more supportive. For example, if you look at the investigation into Alibaba and also the end financial recent fundraising, and if you look at the gaming approval, broadly speaking, they are kind of positive. The second positive is on the delisting side. I think the large handover of these tech companies worrying about delisting, delisted from the US exchanges, but following the MOU by the Chinese regulators and the US regulators, that risk is kind of being removed from those stocks, so that's enough there positive. And the third thing is, as China reopens, as I mentioned before, consumption is going to recover. And for many large tech companies, for example Alibaba, its revenue and earnings are very tightly linked to the retail trends in China. And also, when the economy bounces back, there will be a lot more advertising dollars around, which is another important revenue source for many of these companies. So broadly speaking, they are still very, very positive. And you know, for these tech companies, they are high quality business. Last year, in order to survive in a very difficult environment, many of them actually cut costs, caught headcount and cut. As you know, this year when economy reopen, all of a sudden, there is a revenue boost on the cost side it is lower than last year. >> So there are some potential bullish catalyst for the space. What are some of the risks? It doesn't you like that long ago that these companies were out of favour with Chinese leadership. > Right, that is always the worry. I would say the biggest risk this year is actually the profit-taking, the short-term profit-taking for the near term. Because from the bottom, if you look at some of these tech indexes in China, China has already rallied up 30, 40%, depending on which when you look at. And for many investors, given the back-and-forth and policies in the last several years, they will have, you know, the urge to take the profit. Nonetheless, I think that signals that the first phase of the recovery, which is the hope trade, is largely done. The second phase, which is a solid improvement in the economic fundamental and company fundamental, is still going to continue. So I would actually treat that correction as potential buying opportunity. >> Interesting staff. The opportunities and risks in that space. We have of you are asking about opportunities for the electric vehicle market in China. Is there still opportunity there? >> There is definitely long-term opportunity but in the near term, there are some positives and negatives. the positives are, one of the biggest impediments in the EV space last year was hi lithium carbonate price because if the raw material cost is high, then when the price pressure gets transmitted downstream, it will kind of destroy demand. Or the middle stream and downstream, those companies will have a squeeze on their margins. But this year, since November 2022, the price of lithium carbonate has already dropped more than 20% which is a good use. But on the negative side, we are also seeing the consumer auto demand is weakening a little bit. In the middle of last year, the demand was pretty strong, driven by electrical vehicles. But towards the end of the year, there was some kind of demand pressure. That's one of the reasons that Tesla lowered their prices in China. another factor is that in 2023, the purchased subsidy will be removed. That's another factor on the negative side. >> What is the domestic sort of composition of electric vehicle markets? You mention Tesla, and I think from a Western perspective, most of the headlines we will see in our media is teslas of fortunes or risks in China, but there are other players in the market domestically, aren't there? >> There are, and some of them are pretty strong competitors of Tesla. For example, PYD, another Chinese company last year, the outcompeted Tesla in terms of the number of EV cars sold in China. >> We will get back to your question for Haining Zha in just a moment. As always, make sure you do your own research before you make any investment decisions and reminder that you can get in touch with us and anytime. Do you have 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@moneytalklive@td.com. Or you can use the question box right below this screen here on WebBroker. Just write in your question and hit send. You will see one of our guestscan get you your answer right here at MoneyTalk Live. Following a year marked by labour strife, service problems and uncertainty over a merger deal, the North American Railway sector now faces the impact of a potential recession. There is a lot going on there andhere's Anthony Okolie. >>TD Securities is protecting strong… The 2023 outlook remains uncertain. They expect healthy double-digit year-over-year earnings growth in the fourth quarter of this year. There is one exception of a US rail company which they note in the report. The fourth quarter earnings-per-share are down 1 to 2% across-the-board versus their mid to late Q4 estimates, December forecast, rather. Otherwise, there estimates are marginally plus or minus the consensus. 2023 earnings-per-share estimates are largely aligning with consensus. Regarding real volumes, TD Securities notes that volumes were down about 1% year-over-year in the fourth quarter of last year. Now with respect to some of those volumes, we will start with Cole, they expect that we could have some upside expectations in 2023. That would be largely driven by utility stockpiles which they feel need to be replenished. And the fact that global index prices for coal remain high. Regarding auto production, they think that auto production should rise this year particularly because we are seeing low dealer inventories. But higher rates, interest rates specifically, economic uncertainty, could weigh on demand this year. They also believe that Canadian grain is a major tailwind for Canadian rail companies and that's because we know that Canada had record output in 2022. Canada is positioned to be a major supplier in early 2023 countries such as the United States. That could certainly benefit railroads. But they believe that US grain is a slight negative, again, due to some harsh weather conditions. That combined with the production of corn, soybeans and wheat is expected to fall about 6% this year. And finally, with regards to intermodal transportation, this involves moving cargo from one destination to another destination using more than one method of transportation, that could be train and ship or train and truck, they believe that this is an area of uncertainty admitted the retail inventory overhang we saw last year as consumers shift their spending from goods back to services. Now, TD Securities base case calls for most rails to guide to plus or minus flattish volume growth this year. Finally, regarding valuations with training at about 19 1/2×2023 earnings estimates per share, they believe that right now, the evaluations seem to be discounting a mild to short recession this year. Greg? >> So that's the TD Securities take on the rails this year. What did they layout as the biggest risks in their thesis? >> I think one of the risks include lower-than-expected economic growth which could further dampenrail values. They also point to inflationary pressures. If inflationary pressures persist, we could see rapid increases in fuel prices or other cost, that could squeeze profit margins for many railroad companies. Other risks include unfavourable regulatory developments, labour disruptions and harsh weather. >> Interesting stuff. Thanks for that. And> My pleasure. >> MoneyTalk Anthony Okolie. Let's check in on the markets. A bit of a lacklustre day and both sides of the border. We are fearing a little bit better in Toronto. Down 65 points. We seem to be sliding around in negative territory, down a little bit less than 1/3 of a percent. Nutrien is under some pressure today. I want to check in on those shares. They are down to the tune of about 1.7%. Nothing is too dramatic in either direction, including Nutrien. 76 bucks and change. I think that's the US listing. Let's take a look at Kinross. As I said, there's a movement into gold. Six bucks and $0.23, it's up 1. 2%. South of the border, the S&P 500, having a lacklustre day again. 33 points of the whole, a little bit less than a full percent. The tech heavy NASDAQ seems to be faring a little bit worse but it's coming off the lows, it is down to the tune of about 1%. I want to take a look at Netflix, they are expected to report after closing bells today. They've gotten a lot of questions about the new ad-supported tier of service and some of their other initiatives to stop people from sharing passwords aimed at greater profitably. But overall, if you are interested in the name, there's a lot to do through after the closing bells. Ahead of the report, 321 bucks and change, Netflix is down about 1 1/2%. We are back now with Haining Zha from TD Asset Management, talking China. Let's get back to your questions. Here's one from a viewer. How are the Chinese markets looking from a valuation perspective and what sectors might look attractive? >>The valuation was very reasonable. So if you look at the MBTI in China, it is trading below the long-term average, somewhere between the average and -1 standard deviation. Given that this year we might see in earnings upside following the China reopening, that valuation is very fair. Also if you compare them as CI China versus MSCI world which is all the a developed company, that is right at the long-term average so we are looking at a very reasonable valuation. In China they could face in earning upswing but in the economy for example in the US economy, you could have EPI's revising down which is a completely contrast. In that sense, the valuation looks pretty reasonable. >> But you mentioned earlier that some of the stocks might come under, for instance, profit-taking. People coming out of the hope face, there could be a risk that people take a bit of money off the table and put pressure to the downside. We talk about valuations and if the market looks attractive, what do we need to keep in mind? >> They are doing profit-taking because of the magnitude of the gain. But that magnitude is assuming you are buying a stock at the trough, rock bottom valuation. In mostsituations, it is single-digit. Even after 40% rise, the TE still looks reasonable and we are facing fundamental improvement in the economy so that is not a major concern to me. It is all about the timing at this point. >> If we look at the markets or sectors, or any of them worthy of keeping an eye on this year more than others? >> Right. I'm more bullish in three spaces. The first space would be the consumption names. I mentioned that if China's economic growth is going to outperform for this year, the consumption has to outperform. The second space is technology. Very high quality company is trading at very reasonable valuations. All of the headwinds are gradually dissipating, so that's another space. The third space is the brokerage firm in China. You can imagine in the Chinese market one the boom market comes, all of a sudden trading becomes more active and they get more trading commissions and the capital markets activity will be on the upswing. So historically, if there is a bull market, those brokerage firms never missed the party. > As a final question, I will just ask, if you take all that, what is the biggest risk? If people are looking at China, wondering about investment opportunities, what they need to be mindful of on the risk side? >> One of the risks in my mind is the local government funding… Local government spending is very constrained due to the lockdown and this year, in the recent interview by finance minister, they mentioned that local government funding is still a problem and they want to break the expectation that the local government will be the ultimate backstop for those type of entities. Of course, their bottom line is there is no systemic risk. Nonetheless, it could still create some kind of risk events. >> I'm gonna ask you one more question because we got it in late from one of the viewers. It's about the People's Bank of China. We talk so much about monetary policy for some other nations, what are the chances that they will want to stimulate the Chinese economy this year? >> Don't expect a huge amount of stimulus because they don't need to. Naturally, when you reopened, the economy will be on the upswing. But nonetheless, there is still a lot of pressure on the consumer during the healing process. So I guess in the first half of this year, the PBOC is going to be broadly supported.for example, they are going to increase their credit injunction into the real estate sector. They are going to still maintain the overall growth of the credit created it in the economy. the other two factors is if you think about last year, the US dollar was strong. right now the US dollar has turned a corner and the RMV is on the upswing so debt pressure is less. So that is also another factor. >> Fascinating stuff. Always a pleasure to have you on the show and get your insights. >> My pleasure. >> Our thanks to Haining Zha, portfolio manager at TD Asset Management. As always, make sure to do your own research before you make any investment decisions. We will be back tomorrow with an update on the markets and our reaction to the latest Canadian retail sales report. On Monday, Scott Colbourne, Managing Director for active fixed income at TD Asset Management will be our guest taking your questions about fixed income. you don't have to wait until Scott is here on Monday it. You can get a head start by emailing moneytalklive@td.com. That's all the time we have for the show today. Thanks for watching. We will see you tomorrow. [music]