What did you make of this cut? And for
the Saudis to go alone in all this, it's
quite a bold move. I don't think the cut
was too much of a surprise. And look,
it really shows actually how weak demand could actually be
. And if you actually look at refining margins,
this quarter have absolutely collapsed. So the concern is
and the Saudis will know a few months forward,
what really demand is shaping up like. But you're
right. I think it's surprising that some of the
other members didn't join, but they're also thinking of
their own revenues. And I think the Saudis are
also thinking about their budget to balance the budget around
80 80 bucks, a balance budget or something along
those lines. Yes. Yes. I think the
concern is if they keep cutting that does change the
spending outlook for the whole global energy industry. I
mean, one of the sectors we'd like this year
is oil services and one of the areas they said
especially the American service names is the Middle East is
booming. So further cuts. How does that actually
change the growth of spending going into next year and
beyond and that would be a concern I would have
. But the corollary of that is if you've got
a lower oil price as a lack of incentive or
the lack of money to also invest in these products
made by these oil services companies. Absolutely. Look
, oil services have been one of our best sectors
. They've been beating earnings each quarter. We like
the China service names as well. But I completely
agree with you. If demand starts to really weaken
, going into next year, then yes, we
don't need as much products. It seems like the
Saudis are really doubling down. Do you think it's
enough to kind of keep these speculators at bay?
I mean, the short sellers and everybody at the
market right now, how does it really shift?
Do you think market dynamics? Well, I still
think Opec or Saudis in general, they're still looking
at long term fundamentals. I mean, the old
business is a long term business. So they are
looking at what's demand like next year and in the
medium term. And I think the key point also
to this is how is China recovering? I mean
, Hait Tong has just finished our energy tour actually
the last two weeks and you're only starting to see
sort of commodity type products demand recover, I'd even
say sort of last month. So we've got to
see how that pans out over the over the US
and China driving season. How does the whole decarbonisation
side of things play in because I mean, people
are saying that peak oil is getting closer and closer
now. And you know, where are you with
that thinking? Well, look, we're still positive
on renewables even at$80 fundamentally. And if you
look at also policy changes, particularly in the US
with the Inflation Reduction Act also in Europe, etcetera
, we're still at a high price, ok?
It's not the$100 we had last year, but
it's still relatively high. But more importantly, the
cost of renewables has started to come down in some
areas. We've just launched on a company recently in
the solar tracking system, it uses a for tracking
your solar panels next tracker it's called if you use
that product, actually, it is more competitive in
terms of power generation or the cost of power generation
to actually some of the fossil fuel based power.
We just had to talk about trying to stimulus in
the property sector. Is that enough to turn around
commodities? Do you think? I think it's more
about the consumer, how hesitating they are in terms
of their own business plans, whether it's real estate
, whether it's industry in general? I think when
you China gets over that nervousness, then I think
things recover quite sharply. Ok. So give us
a sense of what parts of the whole market you
like right now. So this year look, we've
been positive China energy equities versus overseas names. I
mean, we talk about oil, but natural gas
demand growth could be double digit this year, a
bit like oil, but more importantly, it could
be double digit for the next few years. So
we like sort of the China gas names. Um
again comes back to some of the structural growth drivers
in renewables or around the sort of value chain.
So Rare Earth companies, you can't mind much of
that outside China and therefore there's only a few sort
of companies to choose from. So sales at times
has been sluggish, but it's still relatively robust.
And again, if you take a longer term view
, we still see penetration of E B vehicles around
the world. We've been focusing on that S O
E trade in China as well. Do you think
, you know, oil companies are still one of
the key places to play that? I mean,
what sort of dividend, you know, you're just
getting a decent dividend on? Yes, I mean
, is given one of the best dividend yields amongst
the global energy names and look even at$80 or
even if it's$70 you're still going to see a
robust dividend yield from the sector. I think with
the S O E reform of the China names,
you've started to see them buying back shares that they
never used to be allowed to do. So you're
starting to see, I think the energy names,
yes, really become more like some of the global
energy names and they're offering better yield and they actually
look better value gross yield on sign up 7.9 per
cent Scott. But you look at the components of
the complex, you know, one part which is
a real standout is petrochemicals. You know, it
depends how far you want to go up downstream.
And with that in mind, you know, which
of the Chinese names are going to benefit from that
because that has been fundamentally immensely strong. Yes,
absolutely. Look, I think with the commodity chemicals
, you're again only just starting to see a recovery
in China. But look, the last just chemical
producer in China is called Sinopec, right? So
it does it all really. So again, I'd
still keep with that. And also I think as
China becomes more new energy, it will be Sinopec
type companies which lead that simply because they have so
many retail stations. So you'll either plug your vehicle
in the station or get gasoline or get hydrogen.
So I think like we're seeing with the overseas companies
, it's those close to the consumer should benefit in
the long term would be our view. Anything we're
missing right now in terms of this whole, I
mean, obviously when it comes to decarbonisation, as
I mentioned, the shortages everywhere still seems like in
the commodity complex here right now. Are there still
opportunities around some of these sort of themes? Yeah
, I mean, I think with the clean energy
, look at some of the names have sold off
a lot perhaps because they've missed a quarter of guidance
or so. I still think keeping with long term
themes and forget the sort of volatility around some of
the earnings. Do we believe that will be better
solar capacity growth in the world? Yes, we
do and also wind, et cetera. And again
, I mentioned about rare earths, et cetera.
I think keep with these themes and especially if we're
in a backdrop of old commodity prices still being relatively
high. Then it does incentivize us to look up
clean alternatives.