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Katherine Ross: The protests in Hong Kong have been dominating headlines and causing a great deal of investor anxiety. Matt Miskin, co- Chief Investment Strategist at John Hancock investment management. If there's not a resolution soon, what does this mean for the markets?

Matt Miskin: Well, China's right now reaching a perfect storm, so they have a lot to deal with. They have the trade deal and the trade wars that are going on and now they have domestic policy issues that they have to deal with Hong Kong. What we believe is underappreciated is how important China is, one to global equities and two to the global economy. So in terms of equities, be careful of the emerging markets. China makes up about a third of the emerging market equity indices. So that's a huge component. And then for global growth, it's huge component. So they are the number one contributor to global growth and from an economic standpoint. Cyclicality is something you should be careful of. So sectors that are highly cyclical in nature can see weakness as China slows and the emerging markets, because you're going to get pinpoint exposure to China using that. You may want to think about decreasing that. And we actually decreased emerging market equities at the end of last quarter as we saw slowing growth start to develop into the back half of this year.

Katherine Ross: Could the process in Hong Kong impact US-China trade talks?

Matt Miskin: Yes, absolutely. But the thing is, it could impact it more negatively than positively. And the reason why we think that is because the president there needs to actually show a hard stance, as it relates to almost all policies that they're dealing with. So if they show weakness right now as it relates to the United States and trade deals, then that could mean that domestically they would have more issues develop. So, to us, it means that they still have to kind of have this hard line stance as it relates to trade. And that doesn't exactly mean that there's a clear path out of this right now. If you did a cost benefit analysis, there's a lot more costs tallying up relative to the benefits and the markets are volatile as a result.

Katherine Ross: So, if I'm an investor looking at all these concerns, I mean there's a lot of global catalysts impacting the markets right now. What should I be looking at? What should I be doing?

Matt Miskin: Yeah, so one of the things that we really like going into the back half is infrastructure related equities. Now this is small subset of the Global Equity Universe. But think about utility companies. There's alternative energy that can be a component of that. Um, data storage and technology. Um, antennas, these tend to be very boring businesses. They're not cyclical in nature. They don't care if the economy goes up or down. Uh, they tend to be very steady. They can pay high dividends. In Europe, we're finding opportunities that have a 4% dividend yield. That's with a negative interest rate. So if you tried to value that business, it looks pretty attractive. Um, and so infrastructure's one way to lower the Beta or the of your equity portfolio by adding it in there. Uh, and it's also low correlation to other asset classes. So it has about a 0.6 correlation to equities. So that's one of the emerging ideas that we really have and it's likely to become one of our top ideas in the back half.

Katherine Ross: So basically investors should stick with the boring not with things that can be impacted by anything that from Hong Kong to trade talks, nothing like that.

Matt Miskin: Exactly. High risk right now we think is, is vulnerable. Lower risk is, is something steady and something dependable in a portfolio.

Katherine Ross: All right, so we're in currently in the dog days of summer, we're going to head out soon. You know, looking at this, we normally see low volume. We normally see less headlines moving the markets. That's not the case for this August. And I'm wondering, you know, is this August not a summer vacation for investors but rather the hurricane season?

Matt Miskin: Yeah, we definitely would say that volatility and the hurricane analogy is a good one. Um, you know, it is something to be mindful of. It doesn't mean you want to make rash impulse decisions in your investments. You want to have good diversification, good asset allocation. But fixed income is a way to help yourself sleep through the summer nights in fixed income is doing very well. Year to date. We believe bond yields continue to remain very low. So having that fixed income component is a one way to make sure your summer is less exciting, if that's what you're going for.

Katherine Ross: All right, Matt, thank you so much for joining me.

Matt Miskin: Thank you.

Let's take a look at the markets. 

Matt Miskin, co-chief investment strategist at John Hancock Investment Management, sat down with TheStreet to talk about the impact of the Hong Kong protests on the markets and how they could affect the U.S.-China trade talks. 


"...It could impact it more negatively than positively. And the reason why we think that is because the president there needs to actually show a hard stance, as it relates to almost all policies that they're dealing with. So if they show weakness right now as it relates to the United States and trade deals, then that could mean that domestically they would have more issues develop. So, to us, it means that they still have to kind of have this hard-line stance as it relates to trade. And that doesn't exactly mean that there's a clear path out of this right now," said Miskin when asked about the impact on the U.S.-China trade talks. 

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