1 00:00:00,400 --> 00:00:04,920 Speaker 1: Expanding the wall around advanced tech risks, further antagonizing China, 2 00:00:05,400 --> 00:00:08,119 Speaker 1: forcing other countries to pick side. Un told, the new 3 00:00:08,200 --> 00:00:10,520 Speaker 1: ideas have been shared with the U S allies. But 4 00:00:10,600 --> 00:00:13,240 Speaker 1: let's get shoust take on this. You see it at 5 00:00:13,240 --> 00:00:16,759 Speaker 1: Yourizon Asia and getting an outlet for the markets while 6 00:00:16,800 --> 00:00:19,840 Speaker 1: we're at it, with the chip ban on the table 7 00:00:20,040 --> 00:00:23,760 Speaker 1: this as well, sure, And I mean, is this essentially 8 00:00:24,520 --> 00:00:29,880 Speaker 1: just doubling down on the conflict with Beijing? Good morning Mission. 9 00:00:29,920 --> 00:00:31,640 Speaker 1: I think the two things we have to think about 10 00:00:31,680 --> 00:00:33,800 Speaker 1: when we talk about what's going on in tech right 11 00:00:33,840 --> 00:00:37,640 Speaker 1: now is what is the objective of the White House 12 00:00:37,960 --> 00:00:43,199 Speaker 1: and what is the likely response of Beijing. Are the 13 00:00:43,479 --> 00:00:48,639 Speaker 1: policies of the White House trying to stop Beijing from 14 00:00:48,680 --> 00:00:52,479 Speaker 1: having access to military and intelligence technology or is this 15 00:00:52,680 --> 00:00:55,480 Speaker 1: just an effort to try to hold them back from 16 00:00:55,520 --> 00:00:59,880 Speaker 1: their development as any canaconomic power of the second largest 17 00:01:00,280 --> 00:01:03,200 Speaker 1: in the world. I would say that this is about 18 00:01:03,440 --> 00:01:06,320 Speaker 1: military and intelligence, and the reason that they're going after 19 00:01:06,360 --> 00:01:08,480 Speaker 1: these chips that you just mentioned I would call them 20 00:01:08,560 --> 00:01:11,919 Speaker 1: leading edge processing and memory chips is because those chips 21 00:01:11,959 --> 00:01:16,080 Speaker 1: allow you to run very advanced artificial intelligence and interned 22 00:01:16,360 --> 00:01:20,000 Speaker 1: data centers and it's all about collecting the data. And 23 00:01:20,080 --> 00:01:23,120 Speaker 1: that is why it's become very challenging right now to 24 00:01:23,280 --> 00:01:26,080 Speaker 1: pick semi conductor stocks and stocks that feed into the 25 00:01:26,080 --> 00:01:28,559 Speaker 1: food chain in Asia that have to do this area, 26 00:01:28,560 --> 00:01:30,959 Speaker 1: because we just don't know what the next regulation is 27 00:01:31,000 --> 00:01:34,000 Speaker 1: going to be. It is a it's a real, i 28 00:01:34,040 --> 00:01:37,200 Speaker 1: would say, an issue of confidence right now for equity investors. 29 00:01:37,400 --> 00:01:40,680 Speaker 1: And we are continuing to focus on both the policy lines. No, no, no, 30 00:01:40,959 --> 00:01:44,640 Speaker 1: just the word semi conductor, shure, It's far bigger than that, 31 00:01:44,880 --> 00:01:49,800 Speaker 1: because then that implies because it's drawn on the premise 32 00:01:49,840 --> 00:01:52,360 Speaker 1: that any advanced chip can be used by China's military. Now, 33 00:01:52,600 --> 00:01:56,559 Speaker 1: the point being here all chips are of some dual use, 34 00:01:57,200 --> 00:01:59,760 Speaker 1: which means that essentially the US is not committed to 35 00:01:59,760 --> 00:02:03,360 Speaker 1: block in China from essentially all kinds of civilian technologies 36 00:02:03,400 --> 00:02:08,160 Speaker 1: now too. So what what explicit now is trying to 37 00:02:08,200 --> 00:02:12,160 Speaker 1: contain China. So what what the policies are saying is 38 00:02:12,160 --> 00:02:15,119 Speaker 1: that you're not able to access advanced chips. And in fact, 39 00:02:15,240 --> 00:02:18,799 Speaker 1: we've observed that publicly listed companies both in the US 40 00:02:18,880 --> 00:02:21,960 Speaker 1: and Asia are telling us that their mainstream chips are 41 00:02:21,960 --> 00:02:25,040 Speaker 1: still able to be sold in without restrictions or requirements 42 00:02:25,040 --> 00:02:28,560 Speaker 1: for for permits. And the reason for that is that 43 00:02:28,840 --> 00:02:32,920 Speaker 1: if you use mainstream chips to run advanced technologies such 44 00:02:32,960 --> 00:02:37,080 Speaker 1: as artificial intelligence or or or military intelligence, it goes 45 00:02:37,120 --> 00:02:39,560 Speaker 1: at a much slower speed and it doesn't allow you 46 00:02:39,680 --> 00:02:42,920 Speaker 1: to be capable of keeping up with what the Western 47 00:02:42,960 --> 00:02:46,360 Speaker 1: allies are able to do in terms of their military 48 00:02:46,360 --> 00:02:49,520 Speaker 1: intelligence and tracking and such. So Sean Doug in New 49 00:02:49,600 --> 00:02:51,440 Speaker 1: York here, let's take a step back. What does this 50 00:02:51,520 --> 00:02:54,600 Speaker 1: mean for the macro and and the ambition to kind 51 00:02:54,600 --> 00:02:57,440 Speaker 1: of become a little bit more innovative on the tech side, 52 00:02:57,960 --> 00:03:03,520 Speaker 1: away from from the mill terry stuff. So Doug, I 53 00:03:03,520 --> 00:03:06,600 Speaker 1: think it's going to cause two things. The first thing 54 00:03:06,639 --> 00:03:08,880 Speaker 1: it's going to cause it's going to cause a huge 55 00:03:09,000 --> 00:03:12,760 Speaker 1: push in China on innovation. And we've seen from the 56 00:03:12,800 --> 00:03:17,400 Speaker 1: recent announcements out of the National People's Congress as well 57 00:03:17,440 --> 00:03:20,120 Speaker 1: as the loan numbers coming out of the top banks 58 00:03:20,160 --> 00:03:22,920 Speaker 1: that a lot of money is being put into technology 59 00:03:22,919 --> 00:03:26,000 Speaker 1: and innovation in China in general. That's a really good 60 00:03:26,000 --> 00:03:28,280 Speaker 1: thing for the economy, but we would have to assume 61 00:03:28,320 --> 00:03:32,160 Speaker 1: that some of that is being duplicated between innovation technology 62 00:03:32,200 --> 00:03:35,320 Speaker 1: research that's being done within China and outside of China. 63 00:03:35,720 --> 00:03:39,680 Speaker 1: The second issue is what this means for companies that 64 00:03:39,760 --> 00:03:43,760 Speaker 1: are multinational companies who have facilities in China. Today, the 65 00:03:43,880 --> 00:03:49,200 Speaker 1: largest semiconductor or memory chip companies have large facilities within China, 66 00:03:49,560 --> 00:03:51,840 Speaker 1: and they have are able to be able to get 67 00:03:51,920 --> 00:03:55,280 Speaker 1: permits from Washington to allow them to continue to do 68 00:03:55,400 --> 00:03:58,800 Speaker 1: their work in China, so long as they comply to that. 69 00:03:59,040 --> 00:04:02,000 Speaker 1: We think that that's going to be in question. Tell 70 00:04:02,040 --> 00:04:04,600 Speaker 1: me something, sure, I mean, we've seen what's happened here 71 00:04:04,800 --> 00:04:07,360 Speaker 1: in the Hang Seng in Hong Kong and how it's 72 00:04:07,880 --> 00:04:12,400 Speaker 1: just a thirteen year loads. Now this may be a 73 00:04:12,480 --> 00:04:15,680 Speaker 1: buying opportunity to give in evaluations, but then again, nobody 74 00:04:15,680 --> 00:04:18,200 Speaker 1: wants to really load themselves up with the China related 75 00:04:18,240 --> 00:04:21,240 Speaker 1: assets to some extent. What are you looking at? The 76 00:04:21,320 --> 00:04:23,080 Speaker 1: key thing we're looking at is what's going to happen 77 00:04:23,120 --> 00:04:25,760 Speaker 1: on Sunday with the leadership appointment. We need to know 78 00:04:25,839 --> 00:04:28,200 Speaker 1: who is going to be in that all important Cabinet 79 00:04:28,240 --> 00:04:30,599 Speaker 1: of seven and that will tell us if the new 80 00:04:30,640 --> 00:04:35,919 Speaker 1: government is going to be moving towards economic focus or 81 00:04:36,000 --> 00:04:39,400 Speaker 1: social focus. The market has right now priced in a 82 00:04:39,600 --> 00:04:44,400 Speaker 1: reasonably uh muted outlook for the next five years, meaning 83 00:04:44,440 --> 00:04:46,800 Speaker 1: that we are not going to see a big focus 84 00:04:46,920 --> 00:04:49,799 Speaker 1: on the economy and we're going to be focusing instead 85 00:04:49,960 --> 00:04:53,440 Speaker 1: on the social need of common prosperity. Two things can 86 00:04:53,480 --> 00:04:55,680 Speaker 1: happen next week. Number one is we could find a 87 00:04:55,760 --> 00:05:00,320 Speaker 1: cabinet that is filled with much more of a social line, 88 00:05:00,520 --> 00:05:04,440 Speaker 1: see aligned UH politicians who would then I would say 89 00:05:04,920 --> 00:05:06,839 Speaker 1: that would be a concern for the market. I would 90 00:05:06,880 --> 00:05:09,520 Speaker 1: say there is a small chance that we could see 91 00:05:09,560 --> 00:05:12,920 Speaker 1: a cabinet that is much more aligned with the economy 92 00:05:12,960 --> 00:05:16,400 Speaker 1: and world trade, and that would certainly be a positive. 93 00:05:16,480 --> 00:05:18,560 Speaker 1: The winner out of this could in fact be the 94 00:05:18,600 --> 00:05:22,240 Speaker 1: Indian equity market, because we've definitely seen that as negative 95 00:05:22,279 --> 00:05:25,880 Speaker 1: news comes to China, flows go into India. India right 96 00:05:25,920 --> 00:05:31,120 Speaker 1: now is trading it reasonably UH modest valuation on an 97 00:05:31,160 --> 00:05:34,880 Speaker 1: absolute basis. Eighteen point seven four times PE right now 98 00:05:34,960 --> 00:05:38,359 Speaker 1: is something we're generally comfortable with in normal times. But 99 00:05:38,560 --> 00:05:41,719 Speaker 1: given the huge pullback that we've seen across the region, 100 00:05:42,160 --> 00:05:44,440 Speaker 1: that seems rather rich and I wonder whether or not 101 00:05:44,520 --> 00:05:48,840 Speaker 1: that negative flow could be exacerbated by building geopolitical risk. 102 00:05:48,880 --> 00:05:51,559 Speaker 1: I mean, you just had to listen to President Chiefs 103 00:05:51,560 --> 00:05:54,120 Speaker 1: speech the other night at the beginning of the Party Congress, 104 00:05:54,440 --> 00:05:58,080 Speaker 1: Tony Blanken, u s Secretary of State, kind of picked 105 00:05:58,160 --> 00:06:00,360 Speaker 1: up on what I think is very obvious us here 106 00:06:00,360 --> 00:06:03,080 Speaker 1: and listening to the speech. China has made a decision 107 00:06:03,120 --> 00:06:06,200 Speaker 1: to seize Taiwan on a much faster timeline. So when 108 00:06:06,240 --> 00:06:10,039 Speaker 1: you get that kind of building of geopolitical risk, what 109 00:06:10,080 --> 00:06:13,680 Speaker 1: do you do? How do you trade it? Well, the 110 00:06:13,720 --> 00:06:16,240 Speaker 1: markets already telling us that. Look at the valuation right 111 00:06:16,279 --> 00:06:18,919 Speaker 1: now of Taiwanese equities and you can see that there's 112 00:06:19,080 --> 00:06:23,359 Speaker 1: a healthy doath of skepticism to the bulk of the 113 00:06:23,480 --> 00:06:27,520 Speaker 1: market cap of Taiwan is built around semiconductor and hardware 114 00:06:27,560 --> 00:06:31,760 Speaker 1: related stocks. Those stocks tend to price in a recovery 115 00:06:32,160 --> 00:06:35,880 Speaker 1: much sooner than other cyclical stocks. But we're not seeing 116 00:06:35,920 --> 00:06:39,120 Speaker 1: that rebound come back where the market is looking forward 117 00:06:39,200 --> 00:06:43,279 Speaker 1: at this uh, you know, a coming recession of some sort, 118 00:06:43,320 --> 00:06:45,520 Speaker 1: which is what the inverted curve is telling us, and 119 00:06:45,560 --> 00:06:48,960 Speaker 1: that normally would we would see the semiconductor stocks to 120 00:06:49,040 --> 00:06:51,800 Speaker 1: start picking up, they would bottom and start reversing because 121 00:06:51,839 --> 00:06:55,599 Speaker 1: their early cycle, but were unfortunately not seeing that. I 122 00:06:55,640 --> 00:06:59,200 Speaker 1: think what's happening in Taiwan, and particularly the largest semiconductor 123 00:06:59,200 --> 00:07:02,640 Speaker 1: and hardware related companies. Is they're moving from becoming global 124 00:07:02,720 --> 00:07:07,880 Speaker 1: leaders headquartered in Taiwan to global companies that were founded 125 00:07:07,880 --> 00:07:10,480 Speaker 1: in Taiwan. And we can see that with the large 126 00:07:10,600 --> 00:07:14,160 Speaker 1: foundaries as well as the very important hardware and phone 127 00:07:14,160 --> 00:07:17,800 Speaker 1: related companies that are building plants and build and companies 128 00:07:17,800 --> 00:07:21,080 Speaker 1: around the world. That is an incredible geopolitical hedge that 129 00:07:21,120 --> 00:07:24,080 Speaker 1: they're putting onto the operations of their company that gives 130 00:07:24,120 --> 00:07:27,200 Speaker 1: confidence dequity investors. Brian just pointing out to me that 131 00:07:27,240 --> 00:07:30,320 Speaker 1: we've got the Taex down some thirty eight percent year 132 00:07:30,360 --> 00:07:33,280 Speaker 1: to date. Again, it's like the Hong Kong market. Is 133 00:07:33,400 --> 00:07:36,240 Speaker 1: it does this make a screaming buyo or is it 134 00:07:36,240 --> 00:07:38,000 Speaker 1: it's cheap for a reason, isn't it? That's the point? 135 00:07:38,000 --> 00:07:39,960 Speaker 1: But where else you looking at opportunities and which in 136 00:07:40,160 --> 00:07:42,640 Speaker 1: which industry groups across this part of the world. So 137 00:07:43,320 --> 00:07:45,520 Speaker 1: we have to look for some good news. Two places 138 00:07:45,520 --> 00:07:48,520 Speaker 1: that I'm looking right now Indonesia, which is really an 139 00:07:48,520 --> 00:07:52,080 Speaker 1: interesting market that's trading at reasonably fair prices, and we're 140 00:07:52,200 --> 00:07:56,200 Speaker 1: very much focused there on the middle class consumption and 141 00:07:56,320 --> 00:07:59,320 Speaker 1: really basic consumption. Build your first house house by your 142 00:07:59,360 --> 00:08:02,800 Speaker 1: first two week, aller, buy more premium and more healthy food. 143 00:08:02,960 --> 00:08:05,240 Speaker 1: And the second, which I find quite exciting and I 144 00:08:05,280 --> 00:08:08,400 Speaker 1: think is reasonably priced, is Thailand. There's two key themes 145 00:08:08,400 --> 00:08:11,200 Speaker 1: that we're looking at in Thailand. The first is tourism 146 00:08:11,240 --> 00:08:14,040 Speaker 1: and the second is healthcare. If you are a Middle 147 00:08:14,080 --> 00:08:16,960 Speaker 1: Eastern or Asian resident and you want to get world 148 00:08:17,000 --> 00:08:20,640 Speaker 1: class care at an affordable price and then UH to 149 00:08:21,320 --> 00:08:24,640 Speaker 1: recover in a reasonably cover comfortable space, you go to 150 00:08:24,720 --> 00:08:28,280 Speaker 1: Thailand right now, and those securities are are really something 151 00:08:28,280 --> 00:08:30,560 Speaker 1: that's attractive to us. We think that's a very important 152 00:08:30,600 --> 00:08:33,679 Speaker 1: secular change. And the second is open up Thai Thailand. 153 00:08:33,800 --> 00:08:36,439 Speaker 1: It's already been Asians there. We think Europeans are coming, 154 00:08:36,720 --> 00:08:39,560 Speaker 1: and sometime in next year, we believe Chinese tourts are 155 00:08:39,559 --> 00:08:42,520 Speaker 1: going to Thailand. But children, we can talk for Asians 156 00:08:42,520 --> 00:08:44,840 Speaker 1: about that. You want to vote there? From Yourizon just 157 00:08:44,880 --> 00:08:47,920 Speaker 1: taking his UH, getting his take on what's going with 158 00:08:48,000 --> 00:08:49,439 Speaker 1: Asian equity markets.