SHOWS: HONG KONG, CHINA (April 15, 2013) (REUTERS - ACCESS ALL)

LEON GOLDFELD, DIRECTOR OF INVESTMENT, AMUNDI ASSET MANAGEMENT

1. REPORTER OFF CAMERA SAYING:

'What do you make of China's Q1 GDP results?'

2. LEON GOLDFELD SAYING:

'I think the number clearly is a little bit disappointing below expectations. But you have to take it in the context of other data that we've seen. Clearly the Chinese economy has picked up from where it was in that first half of last year, and even in the third quarter. It's picked up quite strongly in the fourth quarter. The momentum is ebbing a little bit. But our expectation is that China can continue to grow around the 7.5-8% level. Certainly for the next quarter and maybe even the quarter after that. So, I wouldn't get too disappointed about the data even though the number was a little bit weaker than expected.'

3. REPORTER OFF CAMERA SAYING:

'Will the growing mountain of debt overshadow China's recovery?'

4. LEON GOLDFELD SAYING:

'There's no doubt that a lot of the growth that we've seen in the last few years, really since the financial crisis, has been funded by significant increase in debt load. And the debt continues to build. We saw the total social financing numbers come out last week which were very strong, which again is an indication that credit growth is there. Our view is that at this point, China's overall debt - whether we look at private sector debt, or government debt, or an aggregate - is still a manageable issue. It hasn't really reached levels that would really cause us to be very concerned. But the trend and the trajectory of strong credit growth does give you some pause to worry. And I think the officials have acknowledged that. So, our expectation is actually that the total social finance figures, the growth rate will start to ebb. And as particularly they're targeting to close down some of these private wealth products which have been the credit generator of recent time. So overall debt is not yet a concern. But it's something that I think the authorities will try to preempt.'

5. REPORTER OFF CAMERA SAYING:

'You are recommending investors not abandon Chinese equities, saying there is more upside than downside. Why is that?'

6. LEON GOLDFELD SAYING:

'What we think when we look at the valuation levels of Chinese equities today - to us when we look at valuation metrics like price-to-earnings ratio, price-to-book - the market looks quite attractively valued. I.e., yes there are concerns, there are potential problems and risks, but we think the valuations are factoring a lot of those concerns. On the positive side, if the authorities are really successful in gradually rebalancing the economy, bringing down the growth rate of credit growth etc., then I think the market can rerate somewhat, because it is quite cheaply valued. So the key drivers that we see going forward is one, we think there is a lot, if you like, pessimism in the way the market is priced. And two, our outlook for growth while we don't see an acceleration, we don't see really a significant slowdown either. So we're going to have maybe around 10%, maybe a little bit less than, that earnings growth. We have an okay dividend yield and the market is cheap. So when you put that together, to us, it looks like the risks in China are for moderate upside than downside.'

7. REPORTER OFF CAMERA SAYING:

'Gold has sunk more than four percent, breaking below $1,500 per ounce. How should investors position when it comes to gold and the rest of the commodities complex?'

8. LEON GOLDFELD SAYING:

'Yeah. I mean gold has been on a downward trajectory for really quite a bit of time and certainly Friday, well it was a big move. But it was part of that trend. And there are some technical factors on Friday with concerns about Cyprus potentially offloading some of its gold holdings to monetize some part of the economy. And our thinking is that what the gold price's really reflecting is the reality that the Fed will have to end QE3 at some point later this year or very early 2014. And so gold tends to be a leading indicator. And I think it's pointing down to the fact that this great monetization experiment that we've had in the U.S. is going to be gradually, not a fast pace, but will gradually be brought to an end. And I think gold is reflecting that. From here with gold at 1500 does it go back up? Probably not much, I mean it can certainly bounce because it's a bit oversold in the short term. But our expectation is that the trend for gold price from here on is maybe towards a little bit more softness rather than strength.'