00:00 Speaker A
Let’s talk about China. The economy there’s slowing in August. That’s according to release from the National Bureau of Statistics. Retail sales, industrial output, and fixed asset investment among the measures expanding less than expected. My next guest says there are still opportunities for investors to buy into Chinese companies.
00:23 Speaker A
Let’s bring in Andrew Mattock. He’s Matthew’s Asia portfolio manager. Andrew, thanks for being here.
00:30 Andrew Mattock
Yeah, no problem.
00:31 Speaker A
So you have this economic data on the one hand. On the other hand, you have headlines coming out of Madrid where Treasury Secretary Scott Beson is meeting with the Chinese Vice Premier, trying to get these negotiations on trade further along. The initial headlines have said they’re making some progress. President Trump scheduled to speak with President Xi on Friday.
00:54 Speaker A
So does that outweigh some of the economic data or how do you think about those factors?
00:59 Andrew Mattock
Yeah, I mean, two things going on at the same time. You know, like you mentioned, the domestic side in China has been soft, really for property market has been soggy for four and a half years. Um, so the data there hasn’t been great, but
1:13 Andrew Mattock
the same time, they are going through this transition on property. Um, and you know, the old story was in China, when property goes down, China goes down. Well, that hasn’t happened. Um, but markets in China were priced, you know, very cheaply. Um, so we have seen a rally that’s that’s been very aggressive in the last year. Um, if you look at the Matthews China Fund, it’s up sort of 65, 70%. And so we’re coming off of, you know, a very depressed valuation level.
1:44 Andrew Mattock
And then the second thing you mentioned was Trump and trade. and Trump and trade, all the rhetoric coming out of Madrid, potential Tick Tok deal. Um, you know, things are moving in the right direction. Um, so that’s just sort of where we’re at at the moment.
2:02 Speaker A
And ever since this whole trade um kerfuffle began, we’ve sort of been having this discussion of who has more to lose, who has more to gain. How do you think about that through the the lens of China?
2:16 Andrew Mattock
Yeah, I I think you’re right. I think, you know, both sides are walking into this, you know, as equal parties. I think if one side could have steamrolled the other, then, you know, we we probably wouldn’t be sitting here still talking about it. Uh, so it’s been going on a long time. I think both parties, it’s in their own self-interest, if you want to put it like that, uh, to work something out and that certainly seems like the direction that that we’re headed. So
2:50 Andrew Mattock
Um, you know, both big economies, you know, number one and two in the world, it’s important. Um, I think it’s important not just for the countries, but for companies as well, um, to be able to plan for the future when it comes to where do I put my manufacturing, um, the level of outsourcing required, um, national security. I think all these things are important, they’re being discussed, but like I mentioned, we’re moving in the right direction.
