Joy Yang joined Point72 as Chief Asia Economist in April 2017. She covers the company’s macro and market research in the region. Before joining Point72, Joy was the Chief Asia Economist at Brevan Howard and Chief Economist for Greater China at Mirae Asset Securities in Hong Kong. Prior to that, she was an economist working at the International Monetary Fund (IMF) from 2007 to 2011. Joy participated in the IMF loan negotiations for Eastern Europe countries during the global financial crisis. Joy obtained her PhD from the University of California, Los Angeles in 2007, first class honors degree from the University of Hong Kong (HKU) in 2002, and one-year study at the Law School at Fudan University. She is originally from Shanghai, China.
Are you forecasting interest rates, exchange rates, inflation, and growth throughout Asia? Do you find more dispersion there than in western markets?
I cover macro research for Asia with a regular focus on China, Japan, and Korea. I also review other Asian economies when interesting investment opportunities arise, or if there is a central bank event that has wider repercussions.
Each economy carries its own unique features, and our approach is to develop a consistent macro framework that can be universally applied to analyze any economy. That allows us to see the big picture while also reconciling the differences across various economies.
I do think that the pace of reshoring will likely accelerate after the pandemic and will continue to be a longer-term trend.
Joy Yang, Chief Asia Economist, Point72
What types of data or signals have you been looking at for insight into the Covid-19 crisis and recovery from it in different regions and countries e.g. Wuhan specific data?
No data is perfect. That’s why we always combine rigorous data analysis with good judgement to make the best economic sense out of it.
During a crisis, when the market is particularly turbulent on a daily basis, we find that higher-frequency data (typically daily or weekly)—despite the extra noise—is key to making early calls on potential investment opportunities.
How widely have Asian central banks adopted unconventional monetary policy e.g. asset purchases?
Global central banks have reacted quickly to the pandemic. The easier global liquidity conditions provided room for Asian banks to run more accommodative monetary policy. However, given the unique nature of the crisis, we found that governments in Asia this time placed a bigger emphasis on the monetary and fiscal policy coordination. That helped maximize the effectiveness of their policy easing.
Has the fiscal response to Covid-19 been weaker in Asia, partly because consumers save more?
Not necessarily. The size of the fiscal response depends on many factors, and so varies across countries. Compared with the 2008 financial crisis, this round of fiscal stimulus focused more on supporting households (through means like cash handouts) and companies that got hit hard by the Covid-19 shock. For example, Singapore introduced four rounds of fiscal stimulus, equal to about 20% of GDP, thanks to their decent fiscal reserves accumulated in the past to be used at crisis time.
If a vaccine is found, how long do you think it will take for travel and tourism to normalize? To what degree would SARS be a useful guide?
There is limited experience we can borrow from the SARS crisis for this Covid-19 shock. Before the recent resurgence in new Covid-19 cases globally, most countries in Asia were just in the stage of discussing the possibility of opening their borders, and only for business travellers. A few have made efforts to open up for tourists in a cautious and highly selective manner.
The approval of an effective vaccine would be positive for the tourism sector. But the impact will depend on how fast the vaccine can be supplied to the mass population. That said, some Asian economies who are more dependent on tourism income may be tempted to open their borders earlier than those who run tourism deficits, such as China.
Do you expect that the longer-term repercussions of Covid-19 could lead to or accelerate some reversal of globalization, reducing global trade, and lead to “reshoring” with more local sourcing of production? Could this be consistent with increased intra-Asian trade?
I do think that the pace of reshoring will likely accelerate after the pandemic and will continue to be a longer-term trend. Reshoring is already happening, partly due to trade tensions between the US and China. Traditional trade theory posits that one country should specialize in producing what it is best at, and trade with others to achieve maximum efficiency from a cost perspective. But more governments are starting to realize that diversification of production, especially for some essential goods, is equally important to hedge the risks of politics, natural disasters or other unpredictable events. It is as simple as never put all your eggs in one basket. Having said that, with Joe Biden winning the US election and Covid-19 cases continuing to rise, the pace of reshoring may slow down until companies have more clarity on US trade policy and have assessed the ability of some emerging markets to manage future crises.
Do you find China can be a leading indicator of some technological trends such as mobile payments, where adoption could be ahead of Western countries?
China’s leading role is growing in some technological areas, driven by its massive domestic market (700+ million active internet users), and its generous spending on R&D and infrastructure over the past decade. Mobile payments, QR codes, and facial recognition technology are widely used in many areas in China, from paying bills, picking up packages, calling a taxi, to today’s contact tracing of possible Covid-19 cases. Whether Western countries will be able to catch up or not may depend on how consumers choose to balance convenience versus privacy protection.
What are the biggest tail risks you see in Asia e.g. Taiwan, South China Sea?
Ultimately, the recent South China Sea tension is a reflection of the deteriorating long-term strategic relationship between the US and China. We are waiting to see how the US foreign policy may change under Biden’s leadership.
Whether Western countries will be able to catch up [to China] or not may depend on how consumers choose to balance convenience versus privacy protection.
Joy Yang, Chief Asia Economist, Point72
Earlier in your career, you worked at the IMF. Has your time there informed your understanding of how emerging countries may restructure debt during the Covid-19 crisis?
I joined the IMF in Washington just before the 2008 financial crisis. It was an unfortunate time for the global economy, but it gave me a precious opportunity to learn more than I otherwise would have, and by necessity to learn fast. I worked on an IMF loan program for Ukraine. Our team went there every quarter to bargain with the Ukrainian authorities on the loan terms, with a focus on ensuring that they cut unessential fiscal spending and promoted structural reforms. That experience not only helped me learn how to apply economics to the real world, especially during a major crisis, but it also gave me a chance to see the importance of soft skills, like being an effective communicator, building trust, negotiating, and working as a team.
To mitigate the significant impact of Covid-19, many governments have used fiscal stimulus to support households and businesses that are in financial difficulties because of stay-at-home orders intended to curb the spread of the virus. Countries who do not have sufficient fiscal reserves will have to borrow debt to finance their stimulus spending. While it is too early to know if any countries will default on their debt as a result, it is a reminder of the importance of prudent fiscal policy during normal times to ensure a country’s long-term debt sustainability.
How do you prioritize your research, given the variety of markets and sectors in Asia?
I prioritize my research based on the potential impact of the economy on our portfolio managers’ investment decisions. Take China as an example, not only does it offer many interesting investment opportunities, it also has notable spillover impact on the rest of the world given its large share in the global economy, so it is a major focus.
I also focus on some of the smaller Asian economies especially if there’s a unique situation. One example was Taiwan last year, when its economy was impacted by the ongoing tech dispute between China and the US.
How do you work with portfolio managers and analysts at Point72?
Effective communication is key. We work closely together on a daily basis. The goal is to build mutual trust so that we’re always on the same page and working as a team.
This is what I find the most rewarding working at Point72. The firm hires some of the smartest and brightest portfolio managers and analysts in the industry. They are experts in the sectors they cover, and every time we work together, I get to learn from their insight. The combination of their bottom-up view with our top-down macro view allows me to continually learn, and to improve the insights I can offer them.
What do you find to be unique about the research environment at Point72, and how your team works with the organization?
For years, Point72 has attracted the smartest and brightest in the industry, and my colleagues are some of the most hard-working and self-driven people I know. Every day I get to interact and brainstorm with the talented people here, and it really makes my work exciting. We all try to operate as a team and help each other—sharing knowledge, learning and improving—every day.
I also find that the company culture is very supportive at all levels of career development. The firm makes sure that we are well equipped with the resources we need to deliver our best performance.
Our team has three members, including myself, Dean Maki, our Chief Economist, and David Seif, who is also an economist. We three work very closely to coordinate our views on the global economy and central bank policies to best inform the firm’s investment decisions. We also work closely together with PMs and analysts to share each other’s expertise. Such teamwork is a very enriching experience for me.
Prior to Covid-19, how did you divide your time among Point72’s Asian offices in HK, Tokyo and Singapore?
I used to take trips to our global offices on a regular basis to meet with our investment professionals in person. Those interactions really helped build strong relationships. Now with Covid-19, most of that has had to go virtual. Luckily, the transition has turned out to be quite smooth because of today’s technology, but I’m looking forward to seeing more of my colleagues again in person.
How many staff do you have in Asia now?
We have more than 200 staff in our Asia offices.
Do you help with recruitment in general and women in particular as part of Point72’s programs?
We have a lot of programs to attract and retain women at Point72. For example, we have been sponsoring the Asian University for Women in Bangladesh, a relationship that was initiated by our head of Asia Pacific, Marc Desmidt. As part of that, each summer I recruit one female student from there as an intern so they can learn about finance. We try to get women interested in hedge funds by introducing them to the industry early on, especially in those less-developed areas where women may not consider finance as their first career choice.
For the past few years, we had students from Vietnam, Cambodia, and elsewhere join us as interns and we found that their performance was consistently impressive. And, we are happy when we see those young ladies graduating from our internship program with stronger conviction that they can achieve more than they previously thought.
In economics, do you feel women are more or less underrepresented than in finance? Is the balance being redressed? Did you have any “role models” e.g. Janet Yellen or others?
I don’t think women are greatly under-represented as economists compared with other roles in the finance sector, but I see room for more effort to be made to enhance equal education for girls and women in some less developed economies.
Throughout my life, I was inspired by many role models, both men and women. One in particular is Christine Lagarde, whom I had a short overlap with at the IMF. I relate to her partly because my first ambition for my career was also to become a lawyer, but like Lagarde, I ended up working in the finance industry. I admire her not only because of her very successful career, but also the tremendous effort she made to promote female leadership at the IMF, which positively impacted many of my female colleagues there.
We try to get women interested in hedge funds by introducing them to the industry early on, especially in those less-developed areas where women may not consider finance as their first career choice.
Joy Yang, Chief Asia Economist, Point72
Over the course of your career, how have you seen roles for women in finance change, if at all?
I do see that more conscious efforts are being made to create a more flexible working environment for women, both in the public and private sectors. We’re also seeing more efforts aimed at encouraging the advancement of women, which is resulting in a greater presence of women in senior management roles in finance. More importantly, we’re also seeing greater effort to promote work-life balance for both women and men, which includes encouraging men to take paternity leave.
At Point72, we’re always focused on making sure we’re creating a culture that supports inclusivity and diversity. That starts with our recruiting process, and we have programs in place designed to encourage students from backgrounds traditionally underrepresented in finance to pursue a career in investing. The firm also allows staff to take extra family leave when needed to take care of a family member with a serious health condition. These efforts help make Point72 a more attractive place to work and helps us attract the best talent, regardless of background.
Do you have any advice for young women trying to break into the industry?
Be open to opportunities and do not stay too long in your comfort zone. Those are the wise words I was told by my mentor and that I’d like to pass on. When I graduated from high school 22 years ago, I didn’t even know that there was something in this world called a hedge fund. Life is full of possibilities. When a new challenge comes, take it, even if you do not feel you are completely prepared.
What was your PhD specialization and how much has the subject changed since then?
I specialized in trade policy and its impact on global growth under Professor Arnold Harberger, the American economist, at UCLA. He taught me what real-world economics is really about. My doctoral dissertation found that even in some economies that are known as being “export-oriented”, a significant portion of growth was actually domestically driven. Since then, my work focus has changed a lot, from forming policy advice for countries in crisis while I was at the IMF, to assisting investment decisions at hedge funds. But the economics and the analytical skills behind all these are still the same.
Tell us more about your background. What interested you about economics and how did you end up in finance?
It was almost by accident that I ended up studying economics. My first career ambition was to become a lawyer. I had planned to study at the Law School at Fudan University in Shanghai when I graduated from high school, but that year I was offered a full scholarship – the first time that high school students in mainland China were being offered chances to study in Hong Kong – and I accepted. I could choose my major again, and because the legal system was so different in Hong Kong from that of mainland China, and the fact that Hong Kong is a global financial center, I decided to switch to economics and finance.
Tell us about your experience at the IMF. What was your focus there?
I worked on six countries in Europe, Asia, and the Americas at the IMF. Some were in crisis and in the midst of an IMF loan program, some were low-income countries seeking to improve their potential growth, and some were emerging markets that faced challenges in managing the volatility in their capital account. It was a very rewarding experience for me to work on different types of economies, and to build a solid analytical foundation as a real-world economist.
What was it like transitioning to the buyside and how does it differ from your previous roles?
I had two major transitions in my career. One is from the public sector to the private sector. My focus changed from advising what the government “should” do to forecasting what the government “will” do. That was quite a change, but I think I managed to quickly adapt to the mentality of the private sector.
My second transition was from sell-side to buy-side, specifically to hedge funds. Here, my research can have a more direct impact on investment decisions, which is also a great responsibility. The most important lesson I have learned is that it is not just about generating returns, it is also about damage control. If I find a mistake, or I need to change my view as new information comes in, I do it right away so that our investment professionals can incorporate that as quickly as possible. Efficiency and result are key. So far, I like the fast pace. I find it rewarding, and it motivates me to deliver my best performance.