SHOWS: HONG KONG, CHINA (MAY 7, 2014) (REUTERS - ACCESS ALL)

ANDREW FRERIS, INDEPENDENT STRATEGIST

1. (QUESTION GRAPHIC)

'What will be the knock-on effect for technical stocks in China with Alibaba IPO in the limelight?'

2. ANDREW FRERIS SAYING:

'Well we have to keep in mind three particular points here. One is that technical stocks overall have been doing poorly. A) of course because of the concern about another technical bubble and B) because some of the earnings or it is the earnings expectations have been poor. In the case of Alibaba, although there are international connections, in other words, it has outside shareholders, we have to keep in mind that this is a primarily, if not overwhelmingly, a Chinese tech internet company. And of course the Chinese equity market, although Alibaba is being done outside, it's been done in New York, the Chinese equity market has been extremely poor -- one of the worst performance in Asia with more than five to six percent year-to-date down. Also, of course, there is always the question about their pricing of the IPO and this links back to the concerns over a potential bubble. So I would approach an IPO of a tech stock cautiously, even if that reflects the potential strength of the large internet market in China in the context always that the Chinese shares so far have been doing badly.'

3. (QUESTION GRAPHIC)

'China trade data for April is expected to show another decline in both imports and exports. Has the country's economic slowdown bottomed out?'

4. ANDREW FRERIS SAYING:

'Well my answer has got two parts. I will never tire of repeating that the Chinese economy is not, N-O-T, is not export-driven. And looking at simply export numbers is completely incorrect, you have to look also at the import numbers. If import numbers fall faster than export numbers, then effectively this is a boost to the economy. Also we have to keep in mind that the net exports -- that's what matters, not just the export number -- the net exports on average are less than ten basis points to a hundred basis points growth in China. So the impact of that is important, of course, on regions. It's important on individual companies, but it's not necessarily important for the Chinese economy itself. So yes I would be concerned if their net exports decline. I would be totally unconcerned if the net exports actually increase because that would be a boost to GDP growth, even if both imports and exports fall. I know it sounds completely crazy but that's basic macro-economics.'

5. (QUESTION GRAPHIC)

'How does India fare compared to other emerging markets in the region?'

6. ANDREW FRERIS SAYING:

'Well macro-economically, my main concern is that the last two numbers we had both for WPI and CPI were up rather than down -- in one case, quite a significantly lift. And also when I look at the yield curve, in other words I look at the three-month treasury bills -- I look at the two, the five and the ten-year government bonds -- the yield curve is actually inverted. In other words, the short end is slightly higher than the long end. Not a great deal, we are talking about very few basis points. But at the very least, it's flat. Now an inverted or flat yield curve simply points out to a tight monetary policy, which strictly speaking, it should be the case while inflation is not down and out yet. And that cannot be terribly supportive for the stock market despite the fact that the stock market, as I have been indicating, has been doing quite well. The Sensex taken together with three other indexes -- the Thai, the Indonesian, and the Filipino index -- still are amongst the four top performing markets in Asia. So in comparative terms, if I was to take India with the other three little ones, if I had put my money in the four of them, I would be making anything from ten to twenty percent, that's the case for Indonesia year-to-date in U.S. dollar terms. Very strong performance. But I will not pile up into the Sensex right now even that we only have to perhaps another ten days till we have the election results. And then at least we will know where the policy will be going or not going in any case. But I have a funny feeling that the election results are going to be a damp squib. In other words, the Sensex is hardly likely to move unless of course we have something totally counter-intuitive. Let's say that Congress wins with a huge majority, which on the basis of the current opinion polls is very, very unlikely.'