Glenn Freeman: And Peter, what are the opportunities in China given the changing demographics there?

Peter Warnes: Look, China has been fantastic to us. And I said, in 2009 and 2010, they stimulated meaningfully and basically saved us from going into recession and I would argue, the rest of the world, from going into deep recession.

So, our resource companies in particular had a picnic basically from 2012 onwards because, one, volumes of resources exported to China went through the roof, prices were high, and then we had a correction, obviously, in 2015 and 2016.

But now, we have got resources coming back again because of, one, more stimulus from the Chinese government, but two, environmental issues that they have closed down there, polluting industries, i.e., iron ore and coal and what have you, and they are importing higher-quality bulks from Australia and Brazil.

Fixed asset investment has been the driving force of their economy, one of the major drivers of their economy, the infrastructure bill and that's helped us. But things have changed in the last 20 years and certainly over the last 10 years. The migration of people from, if you like, the agriculture rice paddy regions into all the cities. It means that that economy now is much, much more western-oriented and consumer-driven. So, it's moving now to a western economy where household consumption is 55 per cent, 60 per cent of the GDP. It's moving that way.

So, what happens is that fixed asset investment has peaked and is falling and so the volumes and steel volumes will start to – have started and will continue to fall. And there will be more and more reliance on consumer services and all that type of thing. We have got healthcare, we have got tourism and we have got education. Those three are in high demand by the Chinese and we have got to satisfy that demand as best as we can. I would argue that those three service-related industries can equal what we export to China in terms of mineral resources by 2025.

Glenn Freeman: And just lastly, in light of your somewhat cautious outlook, what sectors and companies do you see as areas of opportunity for 2018?

Peter Warnes: Glenn, that's a really -- it's a hard question because a lot of the things that we -- as I said, historically, they are changing. We think the commodity prices are elevated and will probably drift lower over 2018 and beyond as fixed asset investment -- the rate of growth of fixed asset investment deteriorates. But the services industries, it will do well.

So, we still like -- healthcare is one of the industries that will do well. And on a global scale, we have CSL and Cochlear and ResMed that are global players, leaders in their industry and with 35 per cent, 40 per cent of the global market. But they are expensive and if we get a correction, then put those on your shopping list. Stocks that are already good value in that space are Ramsay Health Care, Healthscope and to a lesser degree, Sonic. So, you can shop there.

Tourism is a harder industry because there's not a lot of listed players out there. Ardent is one that we have a positive view on. The others in this space, obviously, Event, and Star, and Crown, we don't mind them, but the valuations are a bit stretched. Crown looks interesting and is in the green zone. And then elsewhere, education, I mean, there's very little listed there that we can get our foot on.

Other sectors, I mean, the banks are going to struggle with the Royal Commission. The earnings are going to be subdued. They are all in the hold zone). The yields were attractive. Insurance, we've got QBE up there. It's been a serial disappointer, but it's still showing some value. The REITs interestingly enough with the Westfield situation, that's going to make a big, big hole in the REIT space. I mean, Westfield is over 80 per cent of the total capitalisation of the REITs section. It goes out, and so, investors if they are going to have to be weighted into this property sector, then that could give a filip to some stocks in that space. But again, watch what's happening with bond yields and what have you.

In infrastructure, they again are stretched. But we like Auckland International Airport. It's a dual-listed company and we like that over Sydney Airport, which obviously will be a beneficiary of Chinese tourism. But it's a little bit stretched in terms of price and it's got a more aggressive financial structure than Oakland.

Other sectors, I mean, retail is under the – has been absolutely belted, the household consumption and retail. So, retail sales in Australia are at a 30-year low. Now, that's amazing in terms of the growth. I'm talking about retail sales growth at less than 2 per cent, that's a 30-year low. You would have to be fairly brave to go in there, albeit you've got the Amazon situation as well. Look, Myer -- if you want to have a punt, Myer is probably as good as any -- in the low 60s, but department stores are going to be under a lot of pressure. The others, Domino's, we don't mind in that kind of consumer space. Coca-Cola Amatil is another one in that area. But overall, I think I'd still be very cautious. I'd like to build some cash.

And if this market – through the momentum in the first quarter if it takes this market higher, I'd be building some cash to then looking for some opportunities later in the year.