1 00:00:07,510 --> 00:00:10,850 Speaker 1: Welcome to Kobe time, a podcast series on markets and 2 00:00:10,850 --> 00:00:14,080 Speaker 1: economies from dBS group research. I'm time Rebecca chief economist 3 00:00:14,090 --> 00:00:18,910 Speaker 1: welcoming you to our 92nd episode, the first one of 2023. 4 00:00:19,270 --> 00:00:21,700 Speaker 1: And what better way to kick off the year than 5 00:00:21,700 --> 00:00:24,660 Speaker 1: to talk about the outlook for markets with a seasoned 6 00:00:24,660 --> 00:00:28,340 Speaker 1: trader and strategist. Arsenal Park is the head of Asia 7 00:00:28,340 --> 00:00:32,150 Speaker 1: Equities X. Japan at Baliani asset management. She's new to 8 00:00:32,150 --> 00:00:34,890 Speaker 1: value as me, having joined in november of last year 9 00:00:34,900 --> 00:00:38,200 Speaker 1: and she is based here in their Singapore office. Previously, 10 00:00:38,200 --> 00:00:40,570 Speaker 1: Arjuna worked at Millennium where she was 11 00:00:40,585 --> 00:00:44,264 Speaker 1: a senior portfolio manager covering global tech, media, telecom and 12 00:00:44,265 --> 00:00:47,565 Speaker 1: financial sectors. Prior to Millennium. She was at Sea Town 13 00:00:47,565 --> 00:00:51,055 Speaker 1: Holdings and Temasek Holdings. Are Tiana serves on the board 14 00:00:51,055 --> 00:00:54,525 Speaker 1: of trustees for stanford University's Graduate School of Business Trust, 15 00:00:54,535 --> 00:00:59,025 Speaker 1: 100 Women in Finance, United Women's Singapore, among others. In Argentina. 16 00:00:59,035 --> 00:01:01,565 Speaker 1: Where do you find the time? But welcome to Covid? 17 00:01:02,920 --> 00:01:04,990 Speaker 2: I don't know, it's so nice of you to have me. 18 00:01:04,990 --> 00:01:06,740 Speaker 2: I'm looking forward to our conversation. 19 00:01:06,830 --> 00:01:10,360 Speaker 1: Absolutely. So let's start with your assessment on the rather 20 00:01:10,360 --> 00:01:13,960 Speaker 1: stark selloff that took place in the global markets last year. 21 00:01:13,970 --> 00:01:15,870 Speaker 1: You were on the sidelines of the market most of 22 00:01:15,870 --> 00:01:19,050 Speaker 1: the time. Great timing. But for the market, was it 23 00:01:19,050 --> 00:01:21,569 Speaker 1: just about time or was it unfortunate timing? 24 00:01:22,670 --> 00:01:26,340 Speaker 2: No, it felt like it was about time in not 25 00:01:26,340 --> 00:01:29,430 Speaker 2: so much in that it was predisposed, but I think 26 00:01:29,430 --> 00:01:32,910 Speaker 2: with interest rates and monetary policy being so accommodative because 27 00:01:32,910 --> 00:01:35,440 Speaker 2: of Covid for so long. It was only a matter 28 00:01:35,440 --> 00:01:39,430 Speaker 2: of time before those accommodations had to be taken away 29 00:01:39,440 --> 00:01:43,429 Speaker 2: and each country did it at a different pace. But 30 00:01:43,430 --> 00:01:46,240 Speaker 2: in many ways the US market sets the tone globally. 31 00:01:46,250 --> 00:01:49,450 Speaker 2: And so as soon as those accommodations are taken away, 32 00:01:49,460 --> 00:01:52,490 Speaker 2: you know, some of that, um, 33 00:01:54,390 --> 00:01:57,380 Speaker 2: inflated set of asset prices have to come down. So 34 00:01:57,380 --> 00:02:03,770 Speaker 2: whether it's crypto tech stocks, private markets, um, credit spreads, 35 00:02:03,770 --> 00:02:06,070 Speaker 2: you know, all of it had to sort of take 36 00:02:06,070 --> 00:02:08,570 Speaker 2: some of the air out. And so it makes sense 37 00:02:08,570 --> 00:02:09,480 Speaker 2: that it happened, 38 00:02:10,760 --> 00:02:13,920 Speaker 1: But it was pretty correlated, right? So we normally don't 39 00:02:13,919 --> 00:02:17,910 Speaker 1: see fixed income and equity selloff in such tandem. So 40 00:02:17,910 --> 00:02:21,760 Speaker 1: all those 60, 40 investment just, you know, paid off 41 00:02:21,770 --> 00:02:26,179 Speaker 1: zero and then massively negative last year, um, that is rare. 42 00:02:26,190 --> 00:02:29,490 Speaker 1: So you think it was just the whole stagflation panic 43 00:02:29,490 --> 00:02:31,269 Speaker 1: that caused both sides to sell off in such a 44 00:02:31,270 --> 00:02:32,119 Speaker 1: dramatic manner. 45 00:02:33,200 --> 00:02:35,049 Speaker 2: I mean, it's rare in a sense, but if you 46 00:02:35,050 --> 00:02:37,110 Speaker 2: look at it, they both also went up together. 47 00:02:37,160 --> 00:02:38,120 Speaker 1: You 48 00:02:38,120 --> 00:02:40,780 Speaker 2: know, so it was pretty correlated on the way up 49 00:02:41,350 --> 00:02:44,590 Speaker 2: and pretty correlated on the way down, which I think 50 00:02:44,590 --> 00:02:46,690 Speaker 2: tells you that it has a lot more to do 51 00:02:46,700 --> 00:02:50,440 Speaker 2: dealing with monetary policy than stagflation. If you're gonna pump 52 00:02:50,440 --> 00:02:52,899 Speaker 2: out a lot of money, there's a lot of assets 53 00:02:52,900 --> 00:02:56,570 Speaker 2: to buy and people buy them and then when you 54 00:02:56,570 --> 00:02:59,380 Speaker 2: take all the money away, then they have to sell them. So, 55 00:02:59,389 --> 00:03:02,690 Speaker 2: I mean, I hate to sound flippant simplistic, but it 56 00:03:02,690 --> 00:03:05,960 Speaker 2: really did feel like the punch bowl got taken away. 57 00:03:05,970 --> 00:03:09,000 Speaker 2: It is unfortunate that correlation has become so high, but 58 00:03:09,000 --> 00:03:09,760 Speaker 2: I feel like 59 00:03:10,240 --> 00:03:13,520 Speaker 2: we have been seeing correlation between bonds and equities has 60 00:03:13,590 --> 00:03:17,530 Speaker 2: become positive and high for quite a few episodes in 61 00:03:17,530 --> 00:03:21,269 Speaker 2: this last decade. And my guess is that probably has 62 00:03:21,270 --> 00:03:25,370 Speaker 2: to do with the overwhelming impact of monetary policy in 63 00:03:25,370 --> 00:03:28,620 Speaker 2: this last decade and maybe a bit longer than a decade, 64 00:03:28,620 --> 00:03:32,060 Speaker 2: which is from GFC to now we've lived in a 65 00:03:32,060 --> 00:03:37,480 Speaker 2: pretty unprecedented era of very supportive monetary policy action and 66 00:03:37,480 --> 00:03:39,790 Speaker 2: it does distort these relationships 67 00:03:40,060 --> 00:03:44,800 Speaker 2: and the fundamentals between these different security types. 68 00:03:45,590 --> 00:03:48,520 Speaker 1: Right? I mean, other than commodities, I just can't think 69 00:03:48,520 --> 00:03:52,020 Speaker 1: of any asset class last year that was an area 70 00:03:52,020 --> 00:03:54,690 Speaker 1: where you could hide for a prolonged period of time. Um, 71 00:03:54,700 --> 00:03:58,160 Speaker 1: so with that setting in mind, the Punch Bowl being 72 00:03:58,160 --> 00:04:00,500 Speaker 1: taken away and 2023 73 00:04:00,650 --> 00:04:03,070 Speaker 1: Would be a year where the Punch Bowl I suppose 74 00:04:03,070 --> 00:04:06,200 Speaker 1: stays away for the time being. So what's your sense? 75 00:04:06,200 --> 00:04:10,890 Speaker 1: We've started 23 with some cautious optimism at Fed relenting 76 00:04:10,900 --> 00:04:14,570 Speaker 1: China reopening and I guess the biggest relief is also 77 00:04:14,570 --> 00:04:17,229 Speaker 1: on the energy side. So what's your take on all this? 78 00:04:18,750 --> 00:04:21,860 Speaker 2: You know, I think I'm, I'm pretty constructive on 2023. 79 00:04:21,870 --> 00:04:26,140 Speaker 2: So I think there's a few factors. One is, um, 80 00:04:26,150 --> 00:04:27,210 Speaker 2: positioning 81 00:04:27,730 --> 00:04:30,140 Speaker 2: and positioning is important. It matters 82 00:04:31,000 --> 00:04:34,250 Speaker 2: who owns what at the starting point 83 00:04:35,000 --> 00:04:37,679 Speaker 2: to determine how it's going to do over the year 84 00:04:37,690 --> 00:04:42,250 Speaker 2: in addition to the fundamental and macroeconomic changes. So last 85 00:04:42,250 --> 00:04:43,760 Speaker 2: year everybody owned everything 86 00:04:44,790 --> 00:04:48,150 Speaker 2: and then the punch bowl gets taken away. And so 87 00:04:48,150 --> 00:04:52,550 Speaker 2: it becomes extremely unpleasant because everyone's trying to stop owning things. 88 00:04:52,820 --> 00:04:55,349 Speaker 2: And so there's the fourth seller effect, there's the late 89 00:04:55,350 --> 00:05:00,940 Speaker 2: cellar effect, there's the unwind companies that everybody loved and 90 00:05:00,940 --> 00:05:04,800 Speaker 2: therefore more people owned sometimes suffer more because more people 91 00:05:04,800 --> 00:05:08,789 Speaker 2: are needing to sell it versus something that was horrible. 92 00:05:08,790 --> 00:05:09,930 Speaker 2: Nobody owned it. 93 00:05:10,460 --> 00:05:12,560 Speaker 2: And you know, stock held out because there's not that 94 00:05:12,560 --> 00:05:16,330 Speaker 2: many sellers. So I think this year, the good news 95 00:05:16,330 --> 00:05:16,900 Speaker 2: is 96 00:05:17,460 --> 00:05:21,810 Speaker 2: positioning is cleaner people largely own 97 00:05:22,630 --> 00:05:26,850 Speaker 2: what they want to or what they absolutely could not 98 00:05:26,850 --> 00:05:27,820 Speaker 2: get rid of. 99 00:05:29,430 --> 00:05:32,780 Speaker 2: And so that's a nicer starting point. And I think 100 00:05:32,779 --> 00:05:33,980 Speaker 2: the second is that 101 00:05:34,560 --> 00:05:38,260 Speaker 2: the action of taking the punch bowl away is largely done. 102 00:05:38,260 --> 00:05:40,140 Speaker 2: There's a little bit more taking away, 103 00:05:40,710 --> 00:05:43,290 Speaker 2: but most of it is done. People know it's going 104 00:05:43,290 --> 00:05:44,120 Speaker 2: to happen. 105 00:05:45,040 --> 00:05:49,290 Speaker 2: And then the other uncertainties, which was what will china do, 106 00:05:49,300 --> 00:05:54,420 Speaker 2: what will Japan do on Y. C. C, what is 107 00:05:54,420 --> 00:05:57,990 Speaker 2: european inflation gonna look like a lot of these deeply 108 00:05:57,990 --> 00:06:00,370 Speaker 2: unknown things are better known now. 109 00:06:01,960 --> 00:06:03,969 Speaker 2: I think even um, 110 00:06:04,980 --> 00:06:08,599 Speaker 2: the dynamics around the conflict with Ukraine, 111 00:06:09,690 --> 00:06:15,710 Speaker 2: there are reasons to be optimistic around some format of 112 00:06:16,360 --> 00:06:19,289 Speaker 2: coming to an arrangement in the course of this year 113 00:06:19,290 --> 00:06:21,920 Speaker 2: is the possibility of courses last year it was an 114 00:06:21,930 --> 00:06:23,540 Speaker 2: explosion of a problem. 115 00:06:24,490 --> 00:06:25,360 Speaker 2: So 116 00:06:26,050 --> 00:06:28,960 Speaker 2: I'm constructive because of these, these few things, 117 00:06:29,930 --> 00:06:33,780 Speaker 1: let's uh talk about this, you know, rates issue a 118 00:06:33,779 --> 00:06:36,130 Speaker 1: little bit. So as you pointed out, you know that 119 00:06:36,130 --> 00:06:39,400 Speaker 1: was the proverbial punch ball that was taken away last year. Q. T. 120 00:06:39,400 --> 00:06:42,300 Speaker 1: Will continue through this year even if the Fed sort 121 00:06:42,300 --> 00:06:45,280 Speaker 1: of stops hiking nominal rates. So Arjuna, when we wrote 122 00:06:45,279 --> 00:06:46,750 Speaker 1: the first piece for 20 123 00:06:46,765 --> 00:06:50,095 Speaker 1: 23 We called 2023 was the year of rising real 124 00:06:50,095 --> 00:06:52,815 Speaker 1: interest rates because inflation will come down but the Fed 125 00:06:52,815 --> 00:06:55,395 Speaker 1: won't cut and we will see real interest rates rise 126 00:06:55,395 --> 00:06:57,604 Speaker 1: through the course of the year. Now the fixed-income market 127 00:06:57,605 --> 00:06:59,805 Speaker 1: is convinced that the Fed will be forced to cut 128 00:06:59,805 --> 00:07:01,675 Speaker 1: interest rates at some point this year. And I think 129 00:07:01,675 --> 00:07:05,815 Speaker 1: that probably is also feeding into that buoyancy into the market. 130 00:07:05,825 --> 00:07:09,305 Speaker 1: Could the markets continue to rally even if the Fed 131 00:07:09,315 --> 00:07:12,295 Speaker 1: manages to convince everybody that they're not cutting rates this year? 132 00:07:15,160 --> 00:07:18,110 Speaker 2: No, I don't think so so I agree. Like I 133 00:07:18,110 --> 00:07:20,710 Speaker 2: was looking at Fed Fund rates right? But you're in 134 00:07:20,710 --> 00:07:25,270 Speaker 2: 24 are targeted to be 3%. Okay. Which seems to 135 00:07:25,270 --> 00:07:30,830 Speaker 2: me very, very benign and generous interpretation of the path forward. 136 00:07:30,840 --> 00:07:35,060 Speaker 2: It seems super unlikely to me at the present moment 137 00:07:35,070 --> 00:07:36,810 Speaker 2: based on their messaging 138 00:07:37,330 --> 00:07:40,030 Speaker 2: and I think it's better to prepare for 139 00:07:40,670 --> 00:07:45,900 Speaker 2: a higher for longer path in this year. So does 140 00:07:45,900 --> 00:07:50,030 Speaker 2: that mean markets can rally? I think the elimination of 141 00:07:50,030 --> 00:07:52,010 Speaker 2: a drag is constructive, 142 00:07:52,020 --> 00:07:52,520 Speaker 1: but 143 00:07:52,520 --> 00:07:55,000 Speaker 2: does that mean we go back? I don't think so. 144 00:07:55,530 --> 00:07:57,680 Speaker 2: So I don't think, I think that muscle memory of 145 00:07:57,680 --> 00:07:59,540 Speaker 2: by the day but this is the bottom and therefore 146 00:07:59,540 --> 00:08:01,869 Speaker 2: it's going up. I think we have to look back 147 00:08:01,870 --> 00:08:05,580 Speaker 2: too much older time periods to see that there can 148 00:08:05,580 --> 00:08:08,010 Speaker 2: be two or three years when the market does nothing much. 149 00:08:08,810 --> 00:08:12,810 Speaker 2: It's not just down or just up, there's a lot 150 00:08:12,810 --> 00:08:16,750 Speaker 2: of sideways. We just aren't used to it. Our generation 151 00:08:16,750 --> 00:08:19,080 Speaker 2: isn't used to it because for the last 10 15 152 00:08:19,080 --> 00:08:19,690 Speaker 2: years 153 00:08:20,210 --> 00:08:23,750 Speaker 2: it was much more directional than that. Um 154 00:08:24,540 --> 00:08:28,489 Speaker 2: I suspect that's where it looks like we may be. 155 00:08:29,690 --> 00:08:32,650 Speaker 2: And it's also very interesting because what are we hoping 156 00:08:32,650 --> 00:08:34,860 Speaker 2: for bad news is good news. I. E if there's 157 00:08:34,860 --> 00:08:37,750 Speaker 2: a really bad recession then they pivot then that's good news. 158 00:08:37,750 --> 00:08:40,210 Speaker 2: I mean look I don't think it's gonna work out 159 00:08:40,210 --> 00:08:41,630 Speaker 2: quite that same way 160 00:08:42,309 --> 00:08:44,980 Speaker 2: and I think the third factor around this is as 161 00:08:44,980 --> 00:08:49,460 Speaker 2: china reopens this steadily downward, taking inflation that we've seen 162 00:08:49,460 --> 00:08:50,560 Speaker 2: since november? 163 00:08:51,230 --> 00:08:52,880 Speaker 2: Is it going to just keep going down and we're 164 00:08:52,880 --> 00:08:55,440 Speaker 2: gonna see a little bit of a blip up again 165 00:08:55,440 --> 00:08:56,559 Speaker 2: and then down. 166 00:08:57,080 --> 00:08:59,690 Speaker 2: And is that going to create some panics? 167 00:09:00,260 --> 00:09:01,400 Speaker 2: So I think 168 00:09:02,340 --> 00:09:03,780 Speaker 2: in this year 169 00:09:04,730 --> 00:09:08,520 Speaker 2: I wouldn't look at it necessarily as oh they will pivot. 170 00:09:09,450 --> 00:09:12,170 Speaker 2: That seems difficult to imagine 171 00:09:13,880 --> 00:09:16,640 Speaker 2: if they do it's probably due to some really horrific 172 00:09:16,640 --> 00:09:22,240 Speaker 2: circumstances which will be bad in and of themselves and 173 00:09:22,240 --> 00:09:25,660 Speaker 2: therefore they don't pivot, it's better to just prepare for, 174 00:09:25,660 --> 00:09:28,770 Speaker 2: they'll stay and we have to now worry about the 175 00:09:28,770 --> 00:09:32,010 Speaker 2: longer they stay at a higher interest rate, who has 176 00:09:32,010 --> 00:09:36,440 Speaker 2: the balance sheet and the liability structures and the credit 177 00:09:36,440 --> 00:09:40,800 Speaker 2: quality and the funding cars to survive this higher for longer. 178 00:09:41,059 --> 00:09:45,310 Speaker 2: And that's where it's interesting to see the differentiation between companies. 179 00:09:45,330 --> 00:09:48,000 Speaker 1: Absolutely. I think, I think absolutely spot on and I 180 00:09:48,000 --> 00:09:52,229 Speaker 1: really like your good news is bad news point because 181 00:09:52,230 --> 00:09:55,470 Speaker 1: if the markets believe that inflation is turning a corner 182 00:09:55,480 --> 00:09:58,860 Speaker 1: and it rallies a lot, that means financial conditions ease, 183 00:09:58,870 --> 00:10:01,640 Speaker 1: which then negates some of the Fed rate hikes and 184 00:10:01,640 --> 00:10:03,390 Speaker 1: that kind of compels the Fed to stay clear on 185 00:10:03,390 --> 00:10:03,970 Speaker 1: the higher side 186 00:10:03,985 --> 00:10:07,255 Speaker 1: for longer. Um, just to sort of slow things down 187 00:10:07,255 --> 00:10:10,135 Speaker 1: and make monetary policy work. So again, I think today's 188 00:10:10,145 --> 00:10:12,775 Speaker 1: chart of the week that we have addresses exactly that issue. 189 00:10:12,775 --> 00:10:16,395 Speaker 1: So thanks for bringing that up. You were talking about 190 00:10:16,405 --> 00:10:20,325 Speaker 1: positioning and of course last year, over the last 34 years, 191 00:10:20,335 --> 00:10:22,490 Speaker 1: the big positioning has been on the tech side. 192 00:10:22,650 --> 00:10:25,200 Speaker 1: Uh, and, and some of the cleansing has taken place. 193 00:10:25,200 --> 00:10:27,010 Speaker 1: One could argue there's more cleansing to be done in 194 00:10:27,010 --> 00:10:29,070 Speaker 1: certain parts of the sector and by no means out 195 00:10:29,070 --> 00:10:32,830 Speaker 1: of the woods, but interesting differentiation that us tech having 196 00:10:32,830 --> 00:10:35,950 Speaker 1: sold off in 22 is beginning to show some signs 197 00:10:35,960 --> 00:10:38,770 Speaker 1: of life, but the tech sector that is really roaring 198 00:10:38,770 --> 00:10:39,990 Speaker 1: right now is the China Tech 199 00:10:40,190 --> 00:10:43,179 Speaker 1: Six months ago when I traveled around the world. Question 200 00:10:43,179 --> 00:10:46,950 Speaker 1: was is china even touchable is china investable and now 201 00:10:46,950 --> 00:10:50,540 Speaker 1: no one can get enough of china so your sense 202 00:10:50,540 --> 00:10:52,380 Speaker 1: of this, you know, so this is the tech sector 203 00:10:52,380 --> 00:10:55,349 Speaker 1: and the current state and looking forward especially the china 204 00:10:55,350 --> 00:10:57,320 Speaker 1: versus us asia. 205 00:10:59,540 --> 00:11:01,090 Speaker 2: Yeah, I mean 206 00:11:02,030 --> 00:11:03,040 Speaker 2: I think 207 00:11:03,790 --> 00:11:06,160 Speaker 2: let's go back whether whether it's china versus U. S. 208 00:11:06,160 --> 00:11:09,130 Speaker 2: Force generally on the tax sector right. I think in 209 00:11:09,130 --> 00:11:12,430 Speaker 2: a general sense the tax sector now has to be treated. 210 00:11:12,440 --> 00:11:14,530 Speaker 2: It was a special baby 211 00:11:15,070 --> 00:11:18,229 Speaker 2: like it was behaving in ways where it was very 212 00:11:18,230 --> 00:11:22,000 Speaker 2: differentiated and very special before, especially in that it could 213 00:11:22,000 --> 00:11:26,140 Speaker 2: create a price to sale multiples. It was all about growth. 214 00:11:26,150 --> 00:11:29,430 Speaker 2: It was a lot about personality types and a lot 215 00:11:29,429 --> 00:11:31,980 Speaker 2: about breaking into new markets and that those things were 216 00:11:31,980 --> 00:11:35,500 Speaker 2: being rewarded in a way that was perhaps a little 217 00:11:35,500 --> 00:11:36,420 Speaker 2: out of proportion 218 00:11:37,309 --> 00:11:38,959 Speaker 2: and I think now it goes back to being like 219 00:11:38,960 --> 00:11:39,910 Speaker 2: any other sector 220 00:11:40,730 --> 00:11:44,260 Speaker 2: which is are you good at the price that you're at? 221 00:11:44,270 --> 00:11:47,360 Speaker 2: Are you going to deliver on the performance metrics whether 222 00:11:47,360 --> 00:11:49,960 Speaker 2: it is growth or whether it is profitability or it 223 00:11:49,960 --> 00:11:52,699 Speaker 2: is better management of your class or your gallantry. 224 00:11:53,370 --> 00:11:57,480 Speaker 2: And I think some of the companies are really adapting 225 00:11:57,480 --> 00:12:00,370 Speaker 2: pretty well to it and articulating for investors, how they 226 00:12:00,370 --> 00:12:03,830 Speaker 2: managed to contain cars, where they plan to grow, how 227 00:12:03,830 --> 00:12:05,609 Speaker 2: that growth is going to be done in a prudent 228 00:12:05,610 --> 00:12:08,490 Speaker 2: way and now it remains to be seen, can they 229 00:12:08,490 --> 00:12:10,930 Speaker 2: actually do it because they have not had to do 230 00:12:10,929 --> 00:12:14,500 Speaker 2: it again for more than a decade. So you tell 231 00:12:14,500 --> 00:12:16,929 Speaker 2: me you're going to make things effective. Do you know 232 00:12:16,929 --> 00:12:18,790 Speaker 2: how to take the punch bowl away from the way 233 00:12:18,790 --> 00:12:21,640 Speaker 2: your company operates? Are you gonna be able to deliver 234 00:12:21,640 --> 00:12:23,250 Speaker 2: that in a reasonable time frame 235 00:12:24,090 --> 00:12:26,560 Speaker 2: then? I think there's the second set of companies, right? 236 00:12:26,559 --> 00:12:27,380 Speaker 2: Which are 237 00:12:28,860 --> 00:12:34,230 Speaker 2: they were over penalized. So there was fundamental bad news, 238 00:12:34,230 --> 00:12:36,929 Speaker 2: you know, things weren't going well for them because they were, 239 00:12:36,940 --> 00:12:41,619 Speaker 2: let's say covid beneficiaries. And then the year after reopen, 240 00:12:41,820 --> 00:12:45,330 Speaker 2: they were horribly penalized because they were no longer covid 241 00:12:45,330 --> 00:12:48,940 Speaker 2: beneficiaries and many multiples go back to even pre covid 242 00:12:48,940 --> 00:12:52,040 Speaker 2: times because they're like, oh, everybody bought your stuff in covid, 243 00:12:52,040 --> 00:12:53,760 Speaker 2: but now they don't want it anymore. 244 00:12:54,460 --> 00:12:56,610 Speaker 2: And then will they just come back to normalcy because 245 00:12:56,610 --> 00:12:59,950 Speaker 2: there's always a basic fact. So in co videos, if 246 00:12:59,950 --> 00:13:04,780 Speaker 2: your revenues or profitability went up 100 ex 100%. And 247 00:13:04,780 --> 00:13:08,040 Speaker 2: then last year it fell 50%. Well this year, even 248 00:13:08,040 --> 00:13:11,440 Speaker 2: a 5% growth is enough to make your stocks likely 249 00:13:11,440 --> 00:13:12,090 Speaker 2: go up. 250 00:13:12,850 --> 00:13:15,600 Speaker 2: So I think there is that second category, which could 251 00:13:15,600 --> 00:13:18,060 Speaker 2: be quite interesting. They were very out of favor on 252 00:13:18,059 --> 00:13:23,910 Speaker 2: reopen maybe over penalized and maybe therefore will work. And 253 00:13:23,910 --> 00:13:26,230 Speaker 2: then of course there's the third category, which is, 254 00:13:27,880 --> 00:13:30,140 Speaker 2: You're down a lot, but that may not be the 255 00:13:30,140 --> 00:13:33,320 Speaker 2: end of it, that's not enough because it was a 256 00:13:33,330 --> 00:13:38,230 Speaker 2: very artificially inflated story. You the stock price went up 257 00:13:38,230 --> 00:13:41,270 Speaker 2: three or four x and yes, you fell 80%, but 258 00:13:41,270 --> 00:13:46,089 Speaker 2: that's still 200% over where you started when the whole, 259 00:13:46,100 --> 00:13:48,670 Speaker 2: you know, bubble kind of picked up. So I would 260 00:13:48,670 --> 00:13:51,080 Speaker 2: say you definitely, as you look at these companies wanted 261 00:13:51,080 --> 00:13:55,720 Speaker 2: to say, which pocket are you show me over, penalized 262 00:13:56,140 --> 00:13:59,870 Speaker 2: are not penalized enough for what you are. And that's 263 00:13:59,870 --> 00:14:02,270 Speaker 2: kind of how we think about the tech sector, which 264 00:14:02,270 --> 00:14:05,229 Speaker 2: is a, let's treat it like anything else, whether it's 265 00:14:05,230 --> 00:14:09,710 Speaker 2: banks or industrials or what have, you know, halo effect 266 00:14:09,720 --> 00:14:13,720 Speaker 2: and then bucket these companies in this sort of way. Um, 267 00:14:14,600 --> 00:14:18,800 Speaker 2: as far as the china US dynamic, 268 00:14:19,350 --> 00:14:22,440 Speaker 2: I think it's definitely an important one. If you're talking 269 00:14:22,440 --> 00:14:25,750 Speaker 2: about the tensions between them, sometimes it's sort of spill 270 00:14:25,750 --> 00:14:27,360 Speaker 2: into the tech sector 271 00:14:28,280 --> 00:14:31,630 Speaker 2: on what will regulation do either domestic leader companies or 272 00:14:31,630 --> 00:14:37,020 Speaker 2: regulation costs, uh, cross country that affects companies. I think 273 00:14:37,020 --> 00:14:40,580 Speaker 2: unfortunately most of us are in the field 274 00:14:41,370 --> 00:14:45,680 Speaker 2: are people who look at financial numbers. And so we're 275 00:14:45,680 --> 00:14:50,730 Speaker 2: not very good at policy predictions or regulatory predictions. 276 00:14:52,860 --> 00:14:55,970 Speaker 2: It's really, really hard to say how will the U. S. 277 00:14:55,970 --> 00:15:02,080 Speaker 2: Government ultimately respond to Tiktok as an example and therefore, 278 00:15:02,080 --> 00:15:05,220 Speaker 2: what is the knock on effect for other similar short 279 00:15:05,220 --> 00:15:08,530 Speaker 2: video providers in the US like a snap or it's 280 00:15:08,530 --> 00:15:11,590 Speaker 2: just very, very hard for people like us to predict 281 00:15:11,600 --> 00:15:16,370 Speaker 2: except to know again that I would say pride in 282 00:15:16,370 --> 00:15:19,440 Speaker 2: the last 23 years. If you were a tech investor, 283 00:15:21,750 --> 00:15:25,220 Speaker 2: you thought regulatory risk was not a factor in your sector. 284 00:15:25,880 --> 00:15:27,950 Speaker 2: With the exception of mne 285 00:15:28,820 --> 00:15:30,430 Speaker 2: and um 286 00:15:31,510 --> 00:15:34,590 Speaker 2: uh you know, competition risk and whether it would be 287 00:15:34,590 --> 00:15:37,450 Speaker 2: approved or not approved because you had too much market 288 00:15:37,450 --> 00:15:38,110 Speaker 2: power 289 00:15:39,860 --> 00:15:44,290 Speaker 2: absent that you never really thought about cross country bands 290 00:15:44,300 --> 00:15:47,590 Speaker 2: or that a government might think that you have too 291 00:15:47,590 --> 00:15:49,340 Speaker 2: much um 292 00:15:50,780 --> 00:15:54,140 Speaker 2: pricing power or you're doing something unfairly and therefore I 293 00:15:54,140 --> 00:15:58,100 Speaker 2: can actually meaningfully eat away into your business model. So 294 00:15:58,100 --> 00:16:00,540 Speaker 2: that's a new thing. You know, I think people who 295 00:16:00,540 --> 00:16:01,210 Speaker 2: did 296 00:16:02,510 --> 00:16:07,270 Speaker 2: financials or defense sector, even healthcare, 297 00:16:07,880 --> 00:16:12,100 Speaker 2: we're much more conversant with those ideas that the government 298 00:16:12,100 --> 00:16:16,020 Speaker 2: can change our policy agencies can change the outcome for 299 00:16:16,020 --> 00:16:18,950 Speaker 2: your companies. And so again, it's a great growing up 300 00:16:18,960 --> 00:16:21,140 Speaker 2: phase for people in this sector, 301 00:16:22,180 --> 00:16:26,869 Speaker 1: does that growing up phase creates some scarring among investors 302 00:16:26,870 --> 00:16:28,710 Speaker 1: as well as on C. E. O. S. I'm thinking 303 00:16:28,720 --> 00:16:30,810 Speaker 1: really with china in mind, of course, in the US 304 00:16:30,810 --> 00:16:34,140 Speaker 1: for example, facebook or meta is getting penalized by european 305 00:16:34,140 --> 00:16:37,400 Speaker 1: union one day and now Apple's 30% fee on the 306 00:16:37,400 --> 00:16:40,410 Speaker 1: app store is under scrutiny. But just the sort of 307 00:16:40,410 --> 00:16:44,020 Speaker 1: dramatic regulatory crackdown that we saw in china in 21 308 00:16:44,320 --> 00:16:47,480 Speaker 1: most of 22. Uh do you fear that that sort 309 00:16:47,480 --> 00:16:49,900 Speaker 1: of takes out a whole generation of chinese entrepreneurs like 310 00:16:49,900 --> 00:16:51,610 Speaker 1: they don't want to touch this stuff anymore. 311 00:16:52,690 --> 00:16:55,410 Speaker 2: Ah yeah, I think so. I saw this very interesting 312 00:16:55,410 --> 00:16:58,170 Speaker 2: chart which said that if you looked at the valuation 313 00:16:58,170 --> 00:17:00,640 Speaker 2: of tech stocks and you look at the number of 314 00:17:00,650 --> 00:17:04,560 Speaker 2: kids in college is doing computer science major, it's like 315 00:17:04,560 --> 00:17:07,880 Speaker 2: the exact same line so you can literally overlay it. 316 00:17:07,880 --> 00:17:10,930 Speaker 2: So yeah, for sure. And I think when, when any, 317 00:17:11,540 --> 00:17:15,000 Speaker 2: anytime there's a boom bust in an industry, you definitely 318 00:17:15,000 --> 00:17:19,010 Speaker 2: see talent moving away from that particular sector. And I 319 00:17:19,010 --> 00:17:20,600 Speaker 2: can imagine that happening 320 00:17:21,280 --> 00:17:23,420 Speaker 2: to some extent in china. 321 00:17:23,970 --> 00:17:28,070 Speaker 2: I also think it's a huge benefit to um 322 00:17:29,560 --> 00:17:33,340 Speaker 2: the neighboring regions of china because you'll see a lot 323 00:17:33,340 --> 00:17:37,090 Speaker 2: of chinese entrepreneurs may be interested in setting up in 324 00:17:37,100 --> 00:17:38,649 Speaker 2: other parts of the world. 325 00:17:39,490 --> 00:17:41,700 Speaker 2: These are obviously people who are well out of school 326 00:17:41,700 --> 00:17:43,889 Speaker 2: and either have a company or going to have a 327 00:17:43,890 --> 00:17:46,570 Speaker 2: company and I don't mean it's a benefit in the 328 00:17:46,570 --> 00:17:48,939 Speaker 2: sense of a zero sum game. I don't mean, I 329 00:17:48,940 --> 00:17:50,910 Speaker 2: mean nobody wants it to be a benefit like to 330 00:17:50,910 --> 00:17:53,790 Speaker 2: the detriment of china, I think it's a very positive 331 00:17:53,790 --> 00:17:56,869 Speaker 2: thing for Asia as a whole to have that level 332 00:17:56,869 --> 00:18:00,930 Speaker 2: of cross pollination on that kind of entrepreneurial zest, which 333 00:18:00,930 --> 00:18:04,180 Speaker 2: is uniquely chinese, right? I mean it's 334 00:18:04,500 --> 00:18:07,270 Speaker 2: it's magic in a bottle that they've had and it's 335 00:18:07,270 --> 00:18:10,389 Speaker 2: really admirable quality that they have and it would be 336 00:18:10,390 --> 00:18:15,300 Speaker 2: nice to see that um enthusiasm, in fact the rest 337 00:18:15,300 --> 00:18:19,070 Speaker 2: of Asia by seeing these people who come and amazed 338 00:18:19,070 --> 00:18:21,520 Speaker 2: at the risks they take. You're amazed at the foresight 339 00:18:21,520 --> 00:18:26,310 Speaker 2: they had. Um, and so yeah, that's a wonderful positive 340 00:18:26,310 --> 00:18:29,590 Speaker 2: silver lining that comes out of sometimes a very difficult 341 00:18:29,590 --> 00:18:31,469 Speaker 2: situation for the last two years. 342 00:18:31,720 --> 00:18:34,209 Speaker 2: Um, but I would say in terms of taking the 343 00:18:34,210 --> 00:18:37,080 Speaker 2: talent out again, this is one of those higher for 344 00:18:37,080 --> 00:18:38,820 Speaker 2: longer situations, which is, 345 00:18:39,500 --> 00:18:43,000 Speaker 2: if this is the end of the regulatory tumult in 346 00:18:43,010 --> 00:18:43,820 Speaker 2: china 347 00:18:45,720 --> 00:18:47,250 Speaker 2: or a bulk of it, 348 00:18:47,840 --> 00:18:50,600 Speaker 2: I can see people seeing that as a one time 349 00:18:50,600 --> 00:18:52,840 Speaker 2: reset and still going back to it. 350 00:18:54,210 --> 00:18:58,710 Speaker 2: If this remains a permanent state of anxiety, 351 00:18:59,740 --> 00:19:02,240 Speaker 2: I think it would create more issues. So when I 352 00:19:02,240 --> 00:19:05,230 Speaker 2: talk to friends and colleagues who are 353 00:19:05,990 --> 00:19:10,220 Speaker 2: from mainland china and who live there now or you know, 354 00:19:10,230 --> 00:19:14,500 Speaker 2: are very conversant. Many of them also see some of 355 00:19:14,500 --> 00:19:16,250 Speaker 2: these changes as quite positive 356 00:19:16,830 --> 00:19:21,260 Speaker 2: like they were, there were views that, yes, some merchants 357 00:19:21,260 --> 00:19:23,629 Speaker 2: were having a difficult time with the level of power 358 00:19:23,630 --> 00:19:27,810 Speaker 2: platforms had or some students were in a difficult situation 359 00:19:27,810 --> 00:19:30,820 Speaker 2: because of the amount of after school education. So I 360 00:19:30,820 --> 00:19:32,149 Speaker 2: think there is a 361 00:19:33,010 --> 00:19:37,130 Speaker 2: popularization to some of these policies that when we sit outside, 362 00:19:38,260 --> 00:19:41,930 Speaker 2: we may not appreciate how popular they could be with 363 00:19:41,930 --> 00:19:43,869 Speaker 2: people who live in the country 364 00:19:44,420 --> 00:19:45,680 Speaker 2: and 365 00:19:46,470 --> 00:19:49,240 Speaker 2: therefore they don't just view it in this one sided ways. Oh, 366 00:19:49,240 --> 00:19:50,080 Speaker 2: it was bad. 367 00:19:50,690 --> 00:19:52,540 Speaker 2: It's just the same as like when Dick Dock was 368 00:19:52,540 --> 00:19:54,170 Speaker 2: taken away from India 369 00:19:55,020 --> 00:19:57,330 Speaker 2: we can view it as being market unfriendly 370 00:19:58,440 --> 00:20:01,070 Speaker 2: but there is some group of people that find it 371 00:20:01,070 --> 00:20:04,629 Speaker 2: quite the right decision inside the country. So you know 372 00:20:04,630 --> 00:20:07,860 Speaker 2: our views inside and outside can be quite different. 373 00:20:07,869 --> 00:20:12,760 Speaker 1: Right Indeed. To your first point, I'm actually really fascinated 374 00:20:12,760 --> 00:20:15,980 Speaker 1: by that point that the chinese entrepreneurs if indeed they 375 00:20:15,980 --> 00:20:16,680 Speaker 1: see 376 00:20:16,910 --> 00:20:19,619 Speaker 1: some degree of limitation of opportunities or limitation of growth 377 00:20:19,630 --> 00:20:22,070 Speaker 1: in the mainland and they take their know how and 378 00:20:22,070 --> 00:20:25,130 Speaker 1: try to expand their horizon around the world. I think 379 00:20:25,130 --> 00:20:26,399 Speaker 1: of that not only in terms of their know how 380 00:20:26,400 --> 00:20:28,580 Speaker 1: but also in terms of capital that you know all 381 00:20:28,580 --> 00:20:31,250 Speaker 1: this china plus talk that is going on but we 382 00:20:31,250 --> 00:20:34,250 Speaker 1: have this regional comprehensive economic partnership in Asean 383 00:20:34,270 --> 00:20:37,200 Speaker 1: and North Asia which allows chinese companies with as much 384 00:20:37,200 --> 00:20:40,200 Speaker 1: as 40% value added to build elsewhere and then exported 385 00:20:40,210 --> 00:20:44,090 Speaker 1: under that country's maiden name. So I think that is 386 00:20:44,090 --> 00:20:46,770 Speaker 1: a huge incentive for chinese capital also to flow in 387 00:20:46,770 --> 00:20:49,709 Speaker 1: the region. And to your point it's not a zero sum. 388 00:20:49,720 --> 00:20:52,820 Speaker 1: It's a it's a win win for everybody. Um So 389 00:20:52,820 --> 00:20:55,310 Speaker 1: speaking of that that the you know the win win 390 00:20:55,310 --> 00:20:58,020 Speaker 1: part and the regional benefits. So what's your sense of 391 00:20:58,020 --> 00:20:59,790 Speaker 1: the Asean stocks for 2023 392 00:21:01,490 --> 00:21:02,390 Speaker 2: um 393 00:21:03,300 --> 00:21:07,280 Speaker 2: You know I think asean like India has had a 394 00:21:07,280 --> 00:21:09,470 Speaker 2: huge benefit in 2022 395 00:21:10,270 --> 00:21:14,800 Speaker 2: because other markets in Asia have had issues of their own. 396 00:21:16,010 --> 00:21:19,040 Speaker 2: And so if you look at them, they haven't nearly 397 00:21:19,050 --> 00:21:23,220 Speaker 2: um had the same level of distress or even sell 398 00:21:23,220 --> 00:21:25,310 Speaker 2: off and many of them ended up for the year 399 00:21:25,950 --> 00:21:28,900 Speaker 2: versus the rest of Asia but also versus the rest 400 00:21:28,900 --> 00:21:29,520 Speaker 2: of the world. 401 00:21:30,910 --> 00:21:33,719 Speaker 2: To some extent, it's a bit like Mexico right. It 402 00:21:33,720 --> 00:21:38,360 Speaker 2: became a beneficiary of certain trends, whether it's um diversification 403 00:21:38,359 --> 00:21:42,159 Speaker 2: of supply chains or whatever, whatever all the various reasons 404 00:21:43,170 --> 00:21:46,040 Speaker 2: and therefore in a year where um 405 00:21:47,600 --> 00:21:52,730 Speaker 2: china and Japan and potentially um the semiconductor companies that 406 00:21:52,730 --> 00:21:57,920 Speaker 2: are Korea, Taiwan heavy all see some version of its 407 00:21:57,920 --> 00:22:01,300 Speaker 2: been to oversold or there's a reopen or we're reigniting 408 00:22:01,300 --> 00:22:05,720 Speaker 2: monetary policy or tech inventories have come down to, you know, 409 00:22:05,720 --> 00:22:08,660 Speaker 2: starting to de stock enough where there's interest. Again, 410 00:22:09,560 --> 00:22:12,800 Speaker 2: I think capital flows to those areas to an extent 411 00:22:13,350 --> 00:22:15,859 Speaker 2: because the setup is great. The setup is, 412 00:22:16,710 --> 00:22:20,160 Speaker 2: these are cheap, they didn't perform and there's a lot 413 00:22:20,160 --> 00:22:21,220 Speaker 2: of good news ahead 414 00:22:22,440 --> 00:22:26,000 Speaker 2: and so to that extent I think just from a 415 00:22:26,000 --> 00:22:29,070 Speaker 2: larger picture, Asean and India will, I'm not saying they 416 00:22:29,070 --> 00:22:30,260 Speaker 2: will be negative 417 00:22:30,950 --> 00:22:33,680 Speaker 2: but where one thing may perform a lot, the other 418 00:22:33,680 --> 00:22:35,119 Speaker 2: will perform a little less. 419 00:22:36,060 --> 00:22:38,470 Speaker 2: Um because they've had their time in the sun and 420 00:22:38,470 --> 00:22:40,020 Speaker 2: something else has to have. So if you ask me 421 00:22:40,020 --> 00:22:43,510 Speaker 2: that's my feeling very constructive on ASIA in general, but 422 00:22:43,510 --> 00:22:46,649 Speaker 2: within ASIA, some places did well last year and I 423 00:22:46,650 --> 00:22:49,100 Speaker 2: think other places will do better this year, 424 00:22:49,930 --> 00:22:51,869 Speaker 2: luckily in the job that I do, we're not in 425 00:22:51,869 --> 00:22:53,030 Speaker 2: the business of 426 00:22:54,720 --> 00:22:58,940 Speaker 2: predicting what our market will do, which to a large 427 00:22:58,940 --> 00:23:01,560 Speaker 2: extent feels like a fool's errand because it's based on 428 00:23:01,560 --> 00:23:04,030 Speaker 2: what I know today, which will definitely change in like 429 00:23:04,030 --> 00:23:04,879 Speaker 2: just a week. 430 00:23:05,480 --> 00:23:08,650 Speaker 2: Um, and we are in the agnostic business, so let's 431 00:23:08,650 --> 00:23:10,740 Speaker 2: just figure out which company is better than the other 432 00:23:10,740 --> 00:23:12,530 Speaker 2: and then, you know, pair them up well. 433 00:23:13,210 --> 00:23:14,110 Speaker 2: Um, 434 00:23:15,760 --> 00:23:18,310 Speaker 2: but yeah, that's how it feels. It feels that 435 00:23:18,970 --> 00:23:21,489 Speaker 2: those who suffered last year should benefit this year. 436 00:23:22,210 --> 00:23:25,730 Speaker 1: Sure. And you know, even beyond the macro theme, as 437 00:23:25,730 --> 00:23:28,260 Speaker 1: you said, you know, from positioning perspective, I mean, people 438 00:23:28,260 --> 00:23:31,270 Speaker 1: have been just so long US stocks the last few 439 00:23:31,270 --> 00:23:35,890 Speaker 1: years and we had so many uncertainties around 2022. Perhaps 440 00:23:35,890 --> 00:23:38,379 Speaker 1: there is some degree of clarity in terms of, you know, 441 00:23:38,390 --> 00:23:43,110 Speaker 1: regional diversification. That also makes sense. Um, you were mentioning Y. C. C. 442 00:23:43,109 --> 00:23:45,189 Speaker 1: At the beginning of this conversation, I didn't really follow 443 00:23:45,190 --> 00:23:46,520 Speaker 1: up on that. So I just wanted to take an 444 00:23:46,520 --> 00:23:48,040 Speaker 1: opportunity to go there for a second. 445 00:23:48,300 --> 00:23:51,970 Speaker 1: Japan is a very large holder of US. Treasuries Japan 446 00:23:51,970 --> 00:23:54,230 Speaker 1: is a very large investor in the U. S. And 447 00:23:54,240 --> 00:23:57,129 Speaker 1: all of a sudden in the last say four or 448 00:23:57,130 --> 00:24:00,810 Speaker 1: five weeks we're seeing the yen snap back and appreciate 449 00:24:00,820 --> 00:24:04,990 Speaker 1: huge expectation of abandoning the YCC, which means yields going 450 00:24:04,990 --> 00:24:08,290 Speaker 1: up in Japan. So is there a, you know scenario 451 00:24:08,290 --> 00:24:11,480 Speaker 1: under which Japanese investors start showing tremendous home bias, something 452 00:24:11,480 --> 00:24:13,200 Speaker 1: that they haven't shown in a very long time. 453 00:24:14,520 --> 00:24:18,450 Speaker 2: I think so perhaps at the end of it. 454 00:24:19,550 --> 00:24:20,629 Speaker 2: Um, 455 00:24:22,410 --> 00:24:25,140 Speaker 2: because let's say Y C C is happening and japanese 456 00:24:25,140 --> 00:24:28,130 Speaker 2: yields are rising, it's actually not a great time to 457 00:24:28,180 --> 00:24:29,490 Speaker 2: belong 458 00:24:30,140 --> 00:24:33,750 Speaker 2: japanese bonds, right? Because bond prices coming off. So you 459 00:24:33,750 --> 00:24:35,420 Speaker 2: actually don't want to do that. So there's no home 460 00:24:35,420 --> 00:24:37,450 Speaker 2: bias to start with. 461 00:24:38,260 --> 00:24:40,880 Speaker 2: And then, as you rightly said, the expectation for by 462 00:24:40,880 --> 00:24:44,830 Speaker 2: CC is huge. I mean, I see numbers like, oh, 463 00:24:44,830 --> 00:24:46,429 Speaker 2: it's supposed to go from half point all the way 464 00:24:46,430 --> 00:24:49,980 Speaker 2: up to 2% but that's a big move, of course, 465 00:24:49,980 --> 00:24:54,600 Speaker 2: that's very forward looking from some economists that I read. Um, 466 00:24:54,609 --> 00:24:58,030 Speaker 2: and then there are much more modest ones. Um, if 467 00:24:58,030 --> 00:25:02,260 Speaker 2: that's the case, what you really want to do is, um, 468 00:25:04,510 --> 00:25:07,720 Speaker 2: wait, you want to wait for that. Um, 469 00:25:08,790 --> 00:25:10,130 Speaker 2: I mean you want to be a pair or not 470 00:25:10,130 --> 00:25:14,410 Speaker 2: a receiver. Right? So I think the home buyers may 471 00:25:14,410 --> 00:25:17,030 Speaker 2: turn up at the end if they actually achieve some 472 00:25:17,030 --> 00:25:20,700 Speaker 2: real fuse and move things now on the flip side, 473 00:25:20,700 --> 00:25:25,230 Speaker 2: it's always a relative game. If the rate moving the U. S. 474 00:25:25,230 --> 00:25:26,220 Speaker 2: Is done, 475 00:25:26,880 --> 00:25:28,649 Speaker 2: you know, could we see 476 00:25:29,970 --> 00:25:33,919 Speaker 2: it to be less attractive to continue to hold audio treasuries? Yeah, 477 00:25:33,930 --> 00:25:35,890 Speaker 2: but for the moment they're paying so well. 478 00:25:36,430 --> 00:25:39,609 Speaker 2: So it's hard to imagine it's switching right off the bat. 479 00:25:39,710 --> 00:25:42,620 Speaker 1: Right, right. I I just want to talk a little 480 00:25:42,619 --> 00:25:45,780 Speaker 1: bit about japanese tech, I mean we've always talked about, 481 00:25:45,780 --> 00:25:50,429 Speaker 1: you know, emerging korean tech and Taiwan supremacy and the 482 00:25:50,440 --> 00:25:52,210 Speaker 1: chip cycle and of course china 483 00:25:52,380 --> 00:25:54,939 Speaker 1: and in Japan is almost like an afterthought, but it 484 00:25:54,940 --> 00:25:57,930 Speaker 1: seems to me recently and maybe this is just my 485 00:25:57,940 --> 00:26:00,420 Speaker 1: own sort of, you know, recency bias. I'm seeing increasing 486 00:26:00,420 --> 00:26:04,490 Speaker 1: headlines of that the top end of the technology spectrum, 487 00:26:04,490 --> 00:26:07,680 Speaker 1: the japanese sort of showing signs of excellence again and 488 00:26:07,680 --> 00:26:10,520 Speaker 1: top japanese companies doing some very interesting strategic partnership with 489 00:26:10,520 --> 00:26:14,040 Speaker 1: their counterparts in the US and so on. You look 490 00:26:14,040 --> 00:26:16,090 Speaker 1: at it far deeper than I do. Would you like 491 00:26:16,090 --> 00:26:17,010 Speaker 1: to weigh in on this? 492 00:26:18,970 --> 00:26:22,060 Speaker 2: You know, I think what's interesting is that 493 00:26:22,840 --> 00:26:25,750 Speaker 2: Japan has always had this sort of super advantage and 494 00:26:25,750 --> 00:26:27,040 Speaker 2: industrial check 495 00:26:27,990 --> 00:26:30,480 Speaker 2: and it's been like beyond um 496 00:26:31,000 --> 00:26:36,530 Speaker 2: beyond excellent and you see a lot of um industrials, 497 00:26:36,530 --> 00:26:40,660 Speaker 2: consumer people very enamored by the tech, but you're absolutely right. 498 00:26:40,660 --> 00:26:43,660 Speaker 2: I think it is a second also is the second 499 00:26:43,660 --> 00:26:45,859 Speaker 2: coming of age in the sense that it's always been very, 500 00:26:45,859 --> 00:26:46,870 Speaker 2: very good, 501 00:26:47,410 --> 00:26:49,800 Speaker 2: but I think it also stands out more on the 502 00:26:49,800 --> 00:26:52,720 Speaker 2: stage now, I think they're again pushing a lot more 503 00:26:52,720 --> 00:26:57,040 Speaker 2: boundaries in terms of entrepreneurship in terms of partnership in 504 00:26:57,040 --> 00:27:02,120 Speaker 2: terms of being galvanized towards taking very risk. I think 505 00:27:02,119 --> 00:27:05,419 Speaker 2: there's also less crowding out effect of their very large 506 00:27:05,420 --> 00:27:09,240 Speaker 2: neighbor china uh, in doing it and I think also 507 00:27:09,240 --> 00:27:13,800 Speaker 2: a lot of the specialty is coming in areas that uh, 508 00:27:14,900 --> 00:27:19,020 Speaker 2: customers, clients and partners want to see diversification of who 509 00:27:19,020 --> 00:27:20,090 Speaker 2: they partner with 510 00:27:20,780 --> 00:27:22,560 Speaker 2: and the last but not the least is, you know, 511 00:27:22,570 --> 00:27:23,850 Speaker 2: very sort of 512 00:27:24,760 --> 00:27:29,900 Speaker 2: basic. Again, I read that productivity adjust, Japanese labor is 513 00:27:29,900 --> 00:27:34,530 Speaker 2: now amongst the cheapest and so I mean it's cheaper 514 00:27:34,530 --> 00:27:36,100 Speaker 2: than some of its neighbors 515 00:27:36,770 --> 00:27:39,120 Speaker 2: if that's the case, you know, so you add all 516 00:27:39,119 --> 00:27:41,740 Speaker 2: those things together, I think it makes a ton of 517 00:27:41,740 --> 00:27:45,340 Speaker 2: sense for leadership. Now the yen is gonna appreciate 518 00:27:46,300 --> 00:27:49,560 Speaker 2: um there's a huge wage inflation pressure in Japan so 519 00:27:49,560 --> 00:27:51,460 Speaker 2: it's not gonna hold for a long time, 520 00:27:52,180 --> 00:27:55,170 Speaker 2: but it's a great partner with a tremendous tradition of 521 00:27:55,170 --> 00:27:59,190 Speaker 2: excellence in almost everything it does. It's not surprising that 522 00:27:59,190 --> 00:28:00,480 Speaker 2: this would emerge as well. 523 00:28:01,340 --> 00:28:05,479 Speaker 1: Right. Um Okay, so we had talked about china tech earlier, 524 00:28:05,480 --> 00:28:08,970 Speaker 1: we also touched on china reopening, but just your overall 525 00:28:08,980 --> 00:28:12,159 Speaker 1: long term outlook for chinese stocks, I mean you already 526 00:28:12,160 --> 00:28:15,330 Speaker 1: have pointed out that, you know, you're not geography specific, 527 00:28:15,330 --> 00:28:18,129 Speaker 1: your geography agnostic and you're looking at companies, but I'm 528 00:28:18,130 --> 00:28:20,030 Speaker 1: sure you not only look at china tech, but you're 529 00:28:20,030 --> 00:28:23,210 Speaker 1: looking at the full spectrum of chinese companies. Uh do 530 00:28:23,210 --> 00:28:26,420 Speaker 1: they look healthy? Are they burdened with too much debt? 531 00:28:26,600 --> 00:28:31,800 Speaker 1: Um will they still deliver interesting innovation and economies of scale? 532 00:28:31,800 --> 00:28:32,990 Speaker 1: What's your overall sense? 533 00:28:33,550 --> 00:28:36,460 Speaker 2: Yeah, I mean I'm very, I'm constructive on china in 534 00:28:36,460 --> 00:28:38,670 Speaker 2: the sense that um 535 00:28:40,060 --> 00:28:42,870 Speaker 2: They will deliver on innovation over time. Right. This is 536 00:28:42,870 --> 00:28:46,860 Speaker 2: not a situation yet, you know, 1.3, billion people 537 00:28:47,440 --> 00:28:50,890 Speaker 2: with a hugely stem background 538 00:28:51,710 --> 00:28:55,890 Speaker 2: with huge amount of capability, ambition and also big path 539 00:28:55,900 --> 00:28:59,500 Speaker 2: of GDP per capita development over the years. So I 540 00:28:59,500 --> 00:29:02,140 Speaker 2: think they will, I think um 541 00:29:03,800 --> 00:29:06,570 Speaker 2: in the near term also I'm pretty constructive because it's 542 00:29:06,570 --> 00:29:09,600 Speaker 2: been so beaten up and they're delivering so much good 543 00:29:09,600 --> 00:29:12,620 Speaker 2: news both in terms are reopened, but also in terms 544 00:29:12,620 --> 00:29:15,940 Speaker 2: of measures to support different parts of the economy, whether 545 00:29:15,940 --> 00:29:20,510 Speaker 2: it's the property sector or um, just overall growth etcetera. 546 00:29:21,740 --> 00:29:23,120 Speaker 2: What I think is the bath is going to be 547 00:29:23,120 --> 00:29:24,120 Speaker 2: a bit choppy 548 00:29:24,740 --> 00:29:28,070 Speaker 2: because you're exactly right that there's pockets of um 549 00:29:28,750 --> 00:29:35,920 Speaker 2: debt balance sheet, backlog of issues back stock of inventory. 550 00:29:35,930 --> 00:29:43,020 Speaker 2: Um it's unclear to see whether the distribution of consumer 551 00:29:43,020 --> 00:29:44,190 Speaker 2: balance sheet 552 00:29:44,910 --> 00:29:50,050 Speaker 2: is even um uneven, is it much more uneven, etcetera. 553 00:29:50,050 --> 00:29:53,620 Speaker 2: And what I mean by that is an example is that, 554 00:29:53,630 --> 00:29:55,860 Speaker 2: you know, a lot of people thought that the chinese 555 00:29:55,860 --> 00:29:59,880 Speaker 2: consumer coming out of this covid set of uh, what 556 00:29:59,880 --> 00:30:01,640 Speaker 2: is it? Zero covid policies 557 00:30:02,520 --> 00:30:05,870 Speaker 2: Would not be quite as well off. But once we 558 00:30:05,870 --> 00:30:08,650 Speaker 2: looked at the math actually they are, they have managed 559 00:30:08,650 --> 00:30:12,710 Speaker 2: to save an incremental another 30% part of that is 560 00:30:12,710 --> 00:30:14,500 Speaker 2: because they pulled money out of markets and they put 561 00:30:14,500 --> 00:30:16,930 Speaker 2: them into deposits and therefore we look at deposit growth 562 00:30:16,930 --> 00:30:19,250 Speaker 2: and we say, Wow, that's a big job. If you 563 00:30:19,250 --> 00:30:21,630 Speaker 2: look at it, even if you look at the aggregate, 564 00:30:21,640 --> 00:30:22,490 Speaker 2: it is a job. 565 00:30:23,430 --> 00:30:26,400 Speaker 2: And now the question becomes how will they spend this money? 566 00:30:27,090 --> 00:30:30,730 Speaker 2: So if it is super well distributed across income spectrums, 567 00:30:30,730 --> 00:30:32,580 Speaker 2: then it's a big boost. If it's you know very 568 00:30:32,580 --> 00:30:35,270 Speaker 2: concentrated then it's a boost don't need a certain things. 569 00:30:35,280 --> 00:30:37,490 Speaker 2: So I think in the near term you kind of 570 00:30:37,490 --> 00:30:41,360 Speaker 2: want to look at the pockets of distribution again in 571 00:30:41,360 --> 00:30:43,970 Speaker 2: property is the same thing, right? Some companies are actually 572 00:30:43,970 --> 00:30:47,660 Speaker 2: in very good shape and some are deeply trouble. So 573 00:30:47,660 --> 00:30:50,320 Speaker 2: what percentage of the backlog is sitting with the deeply 574 00:30:50,320 --> 00:30:54,090 Speaker 2: troubled and therefore what what percentage of consumers 575 00:30:54,760 --> 00:30:57,590 Speaker 2: do not get their apartments or get them much, much 576 00:30:57,590 --> 00:31:00,280 Speaker 2: more delayed. So I think it is a choppy part. 577 00:31:00,280 --> 00:31:02,390 Speaker 2: You have to navigate it with a lot of information 578 00:31:02,390 --> 00:31:03,730 Speaker 2: with a lot of data 579 00:31:04,290 --> 00:31:07,570 Speaker 2: and quite carefully overall. I think though the setup is 580 00:31:08,640 --> 00:31:12,390 Speaker 2: pretty constructive. The one thing we definitely watch for is 581 00:31:13,450 --> 00:31:19,150 Speaker 2: The demographics, so we've passed the peak household formation is -3-5% 582 00:31:19,150 --> 00:31:23,190 Speaker 2: estimated going forward for an um and so there's definitely 583 00:31:23,190 --> 00:31:25,380 Speaker 2: a very big shift in the economy and where you 584 00:31:25,380 --> 00:31:28,200 Speaker 2: would want to invest going forward as well. 585 00:31:29,020 --> 00:31:31,520 Speaker 1: Yeah, I think that last point that you know the 586 00:31:31,520 --> 00:31:36,650 Speaker 1: china's tremendous contribution to the world say from 4020 with 587 00:31:36,650 --> 00:31:40,290 Speaker 1: the disinflation impulse and that you know, huge labor force, 588 00:31:40,290 --> 00:31:44,230 Speaker 1: keeping costs down for global manufacturing that shoe I think 589 00:31:44,230 --> 00:31:46,170 Speaker 1: is not going to be filled again. And then that's 590 00:31:46,170 --> 00:31:48,620 Speaker 1: a certain question from my side on the macro side, 591 00:31:48,620 --> 00:31:51,340 Speaker 1: you know, what happens to the inflation dynamic structurally? And 592 00:31:51,340 --> 00:31:54,100 Speaker 1: I suppose from your side from a company profitability perspective, 593 00:31:54,360 --> 00:31:57,530 Speaker 1: how do they keep on doing productivity enhancement when what 594 00:31:57,530 --> 00:31:59,410 Speaker 1: labor cost was going to become such an issue? 595 00:31:59,620 --> 00:32:04,280 Speaker 1: Um, Arjuna innovation, I'm sure just like me, you spend 596 00:32:04,290 --> 00:32:06,990 Speaker 1: some part of your holiday asking chad gpt all sorts 597 00:32:06,990 --> 00:32:10,680 Speaker 1: of questions asking it to write poems and goodbye speeches 598 00:32:10,680 --> 00:32:13,400 Speaker 1: and stuff like that. It is jaw dropping, right. And 599 00:32:13,400 --> 00:32:14,930 Speaker 1: uh and then of course, you know, I've been using 600 00:32:14,930 --> 00:32:17,760 Speaker 1: dolly to to do all sorts of painting. So wave 601 00:32:17,760 --> 00:32:20,520 Speaker 1: of innovation in the space of machine learning and artificial intelligence, 602 00:32:20,520 --> 00:32:22,480 Speaker 1: it's always been happening, but it seems like we've reached 603 00:32:22,480 --> 00:32:25,959 Speaker 1: some sort of an inflection point. Uh, is there an 604 00:32:25,960 --> 00:32:28,390 Speaker 1: investment theme around such cutting edge technology? 605 00:32:29,240 --> 00:32:31,770 Speaker 2: You know, I think yes and no. So what happens 606 00:32:31,770 --> 00:32:34,790 Speaker 2: is the yes part is that there's a lot of 607 00:32:34,800 --> 00:32:38,480 Speaker 2: existing companies on the periphery of this, So is it 608 00:32:38,480 --> 00:32:41,480 Speaker 2: like Microsoft's gonna buy it? And that's interesting or is 609 00:32:41,480 --> 00:32:44,840 Speaker 2: it that um, you know, company X is gonna make 610 00:32:44,840 --> 00:32:46,760 Speaker 2: all the chips for it and then it's going to 611 00:32:46,760 --> 00:32:51,610 Speaker 2: become a huge demand for the chip maker's just the way, 612 00:32:51,620 --> 00:32:53,780 Speaker 2: you know, chip makers used to make chips for, I 613 00:32:53,780 --> 00:32:56,810 Speaker 2: don't know, computer, um personal computers 614 00:32:57,110 --> 00:33:00,330 Speaker 2: and then smartphones came and that was a huge new 615 00:33:00,330 --> 00:33:03,730 Speaker 2: end market while computing kept along and then cars came 616 00:33:03,730 --> 00:33:06,750 Speaker 2: and they become a huge end market and data centers 617 00:33:06,750 --> 00:33:10,270 Speaker 2: came and you know, so if you recall if you've 618 00:33:10,270 --> 00:33:12,700 Speaker 2: been tracking semis for a while, you know that at 619 00:33:12,700 --> 00:33:15,560 Speaker 2: one point they were like horribly cyclical because there was 620 00:33:15,560 --> 00:33:18,010 Speaker 2: only one end market and then they became a bit 621 00:33:18,010 --> 00:33:21,110 Speaker 2: more structurally attractive because there were lots of end markets 622 00:33:21,870 --> 00:33:25,540 Speaker 2: and this may be another one. And with each new 623 00:33:25,540 --> 00:33:28,860 Speaker 2: end market they seem to need even more trip content 624 00:33:28,870 --> 00:33:30,080 Speaker 2: than the previous one, 625 00:33:30,960 --> 00:33:32,340 Speaker 2: which is shocking. 626 00:33:34,300 --> 00:33:37,330 Speaker 2: So I can see how, you know, there are these 627 00:33:37,330 --> 00:33:41,100 Speaker 2: peripheral things, maybe they're more data centers, maybe there are more, 628 00:33:41,770 --> 00:33:45,430 Speaker 2: even things like silver farms or like coolant makers or 629 00:33:45,430 --> 00:33:48,900 Speaker 2: who knows what they need. So I think there are peripherals, 630 00:33:48,910 --> 00:33:51,510 Speaker 2: is there one that is uh, you know what we 631 00:33:51,510 --> 00:33:54,880 Speaker 2: all really want is one large public listed or two 632 00:33:54,880 --> 00:33:58,510 Speaker 2: large public listed companies that only do this. Right. So 633 00:33:58,510 --> 00:34:01,330 Speaker 2: like a pure a pure play 634 00:34:01,890 --> 00:34:06,070 Speaker 2: that unfortunate doesn't quite exist yet. Um, I'm sure it's 635 00:34:06,070 --> 00:34:09,250 Speaker 2: gonna come reasonably, let's just ask gpt what they think 636 00:34:09,250 --> 00:34:12,670 Speaker 2: when it's going to come up. Um but I think 637 00:34:12,670 --> 00:34:14,820 Speaker 2: that is very interesting 638 00:34:16,020 --> 00:34:19,000 Speaker 2: and I mean we're all kind of eagerly awaiting that, 639 00:34:19,000 --> 00:34:22,390 Speaker 2: but if you recall when cloud came out like what's 640 00:34:22,390 --> 00:34:25,239 Speaker 2: the proxy, what's the proxy and then there was this 641 00:34:25,250 --> 00:34:28,110 Speaker 2: CTF which was all cloud company. So it's the same, 642 00:34:28,110 --> 00:34:30,640 Speaker 2: I think it's the same evolution in 34 years. Yes, 643 00:34:30,640 --> 00:34:31,560 Speaker 2: there will be 644 00:34:31,580 --> 00:34:34,320 Speaker 1: right. I heard somebody saying that, you know, any company 645 00:34:34,320 --> 00:34:36,969 Speaker 1: that has even tangential relationship with this will start calling 646 00:34:36,969 --> 00:34:41,620 Speaker 1: this dot ai dot ai around that. 647 00:34:41,960 --> 00:34:44,180 Speaker 2: That's exactly right. Um, 648 00:34:45,810 --> 00:34:49,330 Speaker 2: it's interesting and it will become its next on little 649 00:34:49,330 --> 00:34:50,270 Speaker 2: mini boom. 650 00:34:50,280 --> 00:34:54,919 Speaker 1: That's right now. During the conversation that I've had with you, 651 00:34:54,920 --> 00:34:58,730 Speaker 1: I think you have underscored the complexity of the, you know, 652 00:34:58,739 --> 00:35:01,500 Speaker 1: investment environment, which of course would suggest that, you know, 653 00:35:01,500 --> 00:35:04,420 Speaker 1: people should keep their money with active managers because it's 654 00:35:04,420 --> 00:35:07,390 Speaker 1: not a time for passive investing. Is that a correct 655 00:35:07,390 --> 00:35:10,020 Speaker 1: read on what I'm hearing from you that you would 656 00:35:10,030 --> 00:35:12,460 Speaker 1: much rather tell the whole world to go for active 657 00:35:12,460 --> 00:35:14,150 Speaker 1: managers than just staying with 658 00:35:14,870 --> 00:35:16,130 Speaker 1: index is out there. 659 00:35:17,440 --> 00:35:19,410 Speaker 2: You know, obviously I'm coming to it with a bias, 660 00:35:19,600 --> 00:35:22,040 Speaker 2: have an active manager. I work at a form that 661 00:35:22,040 --> 00:35:26,570 Speaker 2: is uh, that actively manages and I currently work in a, 662 00:35:26,580 --> 00:35:32,830 Speaker 2: in a strategy, um, which is diversified, um, you know, 663 00:35:32,830 --> 00:35:36,850 Speaker 2: market neutral funds, which has, I think in the last 664 00:35:36,860 --> 00:35:39,489 Speaker 2: few years really demonstrated its 665 00:35:39,810 --> 00:35:44,950 Speaker 2: relevance by being able to significantly outperform any passive products 666 00:35:44,950 --> 00:35:46,779 Speaker 2: or being up in an upmarket, being up in a 667 00:35:46,780 --> 00:35:50,509 Speaker 2: down market. So of course, I think, 668 00:35:51,790 --> 00:35:54,790 Speaker 2: yes, if you're on the cutting edge of um 669 00:35:55,820 --> 00:35:59,330 Speaker 2: investing as an allocator. I can totally see and what, 670 00:35:59,330 --> 00:36:02,690 Speaker 2: what one would see is more conversations about allocating to 671 00:36:02,690 --> 00:36:07,460 Speaker 2: these sort of more leading edge active uh funds 672 00:36:08,460 --> 00:36:12,580 Speaker 2: who invest in data who invest in technology who invest 673 00:36:12,580 --> 00:36:15,969 Speaker 2: in people. And you know it's a huge differentiator who 674 00:36:15,969 --> 00:36:20,100 Speaker 2: are diversified across equities and macro and commodities and therefore 675 00:36:20,100 --> 00:36:24,150 Speaker 2: can produce these outcomes for those types of people. Um 676 00:36:24,160 --> 00:36:27,779 Speaker 2: Those kinds of institutions actually um 677 00:36:28,320 --> 00:36:30,130 Speaker 2: It makes a tremendous amount of sense 678 00:36:31,420 --> 00:36:33,330 Speaker 2: now if I look at it just as an individual 679 00:36:33,330 --> 00:36:37,680 Speaker 2: like you and me and investing our personal money, I 680 00:36:37,680 --> 00:36:41,400 Speaker 2: also see that it's very difficult to access these super 681 00:36:41,400 --> 00:36:43,299 Speaker 2: high end um 682 00:36:44,110 --> 00:36:47,379 Speaker 2: a high end, I mean by percentiles of performance return 683 00:36:47,380 --> 00:36:50,620 Speaker 2: the high end percentiles, it's hard to access them as 684 00:36:50,620 --> 00:36:51,489 Speaker 2: an individual. 685 00:36:52,239 --> 00:36:54,520 Speaker 2: And then if you're choosing between 686 00:36:55,460 --> 00:36:59,190 Speaker 2: you know kind of active, let's say the mutual fund 687 00:36:59,190 --> 00:37:04,770 Speaker 2: category versus the passive E. T. F. Category. Um And 688 00:37:04,770 --> 00:37:08,570 Speaker 2: this is just my personal opinion personally I like in 689 00:37:08,580 --> 00:37:12,480 Speaker 2: that choice passive just because it has lower fees 690 00:37:13,340 --> 00:37:16,370 Speaker 2: and long term, you know, we're all constructive about 691 00:37:17,370 --> 00:37:19,569 Speaker 2: equities working and therefore 692 00:37:20,340 --> 00:37:23,109 Speaker 2: this is what I do personally in in a very 693 00:37:23,110 --> 00:37:24,070 Speaker 2: personal manner. 694 00:37:25,050 --> 00:37:28,560 Speaker 2: Of course if you have access to funds that can 695 00:37:28,570 --> 00:37:31,350 Speaker 2: perform at the top 10%ile, then active is the way 696 00:37:31,350 --> 00:37:32,730 Speaker 2: to go. 697 00:37:33,820 --> 00:37:37,340 Speaker 1: But I mean we have seen, you know, innumerable studies 698 00:37:37,340 --> 00:37:40,029 Speaker 1: in finance which showed that over the long term the 699 00:37:40,040 --> 00:37:42,710 Speaker 1: plain vanilla mutual funds have a very hard time are 700 00:37:42,710 --> 00:37:47,000 Speaker 1: performing the index. But that doesn't of course include the 701 00:37:47,010 --> 00:37:51,359 Speaker 1: sort of the frontier exactly has funds and so on. 702 00:37:51,370 --> 00:37:53,219 Speaker 1: Which some of them, not all of them. Some of 703 00:37:53,219 --> 00:37:58,380 Speaker 1: them have of course returned significantly superior performances over the 704 00:37:58,380 --> 00:37:59,219 Speaker 1: longer term. 705 00:37:59,440 --> 00:38:02,529 Speaker 1: Um OK, we've talked a lot about markets. I want 706 00:38:02,530 --> 00:38:04,900 Speaker 1: to hear one thing about you as a professional. I 707 00:38:04,900 --> 00:38:08,300 Speaker 1: mean you spent parts of your career looking at credit markets, 708 00:38:08,300 --> 00:38:11,029 Speaker 1: especially during your 10 days and lately you have been 709 00:38:11,030 --> 00:38:13,750 Speaker 1: focused on equities in the current and the last job 710 00:38:13,750 --> 00:38:16,770 Speaker 1: in particular. So what's your take on managing portfolio risks 711 00:38:16,780 --> 00:38:18,580 Speaker 1: across these sort of classes? 712 00:38:19,450 --> 00:38:21,739 Speaker 2: I have to say. I found credit a lot easier 713 00:38:21,739 --> 00:38:25,870 Speaker 2: because it's purely mathematical. Um And the thing is that 714 00:38:25,880 --> 00:38:30,049 Speaker 2: in credit, you're worried about capital preservation and inequities, you're 715 00:38:30,050 --> 00:38:32,550 Speaker 2: worried about growth. Um 716 00:38:33,510 --> 00:38:36,660 Speaker 2: You know, so in a way, as they say, credit 717 00:38:36,660 --> 00:38:39,120 Speaker 2: is about trust and equity is about hope 718 00:38:39,890 --> 00:38:41,270 Speaker 2: and 719 00:38:41,910 --> 00:38:44,430 Speaker 2: I think both are super exciting 720 00:38:45,060 --> 00:38:47,940 Speaker 2: and especially in, let's say a year, like last year 721 00:38:47,940 --> 00:38:51,110 Speaker 2: truly both were super exciting because credit for a long 722 00:38:51,110 --> 00:38:54,990 Speaker 2: time becomes very dull because if the central banks just 723 00:38:54,989 --> 00:38:58,680 Speaker 2: want to pump money, credit becomes so well priced and 724 00:38:58,680 --> 00:39:01,920 Speaker 2: so rich and you know, everyone's giving you like 3% 725 00:39:01,920 --> 00:39:04,620 Speaker 2: and what's there to do. Um Of course I say 726 00:39:04,620 --> 00:39:06,870 Speaker 2: this is not a um 727 00:39:07,650 --> 00:39:11,319 Speaker 2: credit person now in the relative value sense, there's always 728 00:39:11,320 --> 00:39:13,350 Speaker 2: something to do on a relative value sense. 729 00:39:14,090 --> 00:39:14,950 Speaker 2: Um 730 00:39:16,010 --> 00:39:19,029 Speaker 2: So both are exciting, I think what is very interesting 731 00:39:19,030 --> 00:39:21,620 Speaker 2: and I would strongly advocate this to whoever does it 732 00:39:21,630 --> 00:39:24,259 Speaker 2: is try over time 733 00:39:24,790 --> 00:39:28,100 Speaker 2: to invest or learn or at least understand the relationships 734 00:39:28,100 --> 00:39:31,180 Speaker 2: between the various different parts of the capital structure 735 00:39:31,860 --> 00:39:34,280 Speaker 2: because it's good to be able to say is this 736 00:39:34,280 --> 00:39:37,330 Speaker 2: actually an attractive time for equity? That doesn't mean you 737 00:39:37,330 --> 00:39:39,850 Speaker 2: don't invest in equity, It may mean that you're a 738 00:39:39,850 --> 00:39:43,050 Speaker 2: bit more short rather than long or it may mean 739 00:39:43,050 --> 00:39:46,040 Speaker 2: that you stay on the sidelines a bit more and 740 00:39:46,040 --> 00:39:49,250 Speaker 2: vice versa. If credit is fully priced then you might 741 00:39:49,250 --> 00:39:51,830 Speaker 2: have to move to equity but you realize that you're 742 00:39:51,830 --> 00:39:54,230 Speaker 2: taking greater risk in which part of the capital structure 743 00:39:54,230 --> 00:39:55,109 Speaker 2: you're in, 744 00:39:55,600 --> 00:39:58,480 Speaker 2: if there's a huge dislocation, you can be in credit 745 00:39:58,489 --> 00:40:00,689 Speaker 2: because credit pays you more than equity and you don't 746 00:40:00,690 --> 00:40:03,580 Speaker 2: have to take the whole risk. So it's all very interesting. 747 00:40:03,580 --> 00:40:07,060 Speaker 2: The interplay and I think of course FX and monetary 748 00:40:07,060 --> 00:40:10,620 Speaker 2: policy also become an important thing to understand in the, 749 00:40:10,630 --> 00:40:13,550 Speaker 2: the interaction between the two both are fun. I think 750 00:40:13,550 --> 00:40:16,180 Speaker 2: equities is more for optimists though, I will say 751 00:40:16,920 --> 00:40:17,710 Speaker 1: credit. 752 00:40:17,800 --> 00:40:19,270 Speaker 2: So I quite enjoy it. 753 00:40:19,280 --> 00:40:22,219 Speaker 1: Credit for trust and equity for hope. I think I'm 754 00:40:22,219 --> 00:40:23,940 Speaker 1: gonna coach you on that one even if that's not 755 00:40:23,940 --> 00:40:25,540 Speaker 1: an original code. That's a good one, I like it 756 00:40:25,540 --> 00:40:29,210 Speaker 1: very much. Arjuna before we end one final question, you 757 00:40:29,210 --> 00:40:32,660 Speaker 1: are one of the 100 women in finance when you 758 00:40:32,660 --> 00:40:37,240 Speaker 1: go to gatherings of buy side professionals five years ago 759 00:40:37,239 --> 00:40:39,920 Speaker 1: versus now, hopefully with the reopening you are actually going 760 00:40:39,920 --> 00:40:42,509 Speaker 1: to some gatherings like that. Are you seeing more women 761 00:40:42,510 --> 00:40:43,210 Speaker 1: in financing 762 00:40:43,210 --> 00:40:43,710 Speaker 2: before 763 00:40:45,160 --> 00:40:48,590 Speaker 2: In five years? No, I think over 15 year 764 00:40:49,500 --> 00:40:52,170 Speaker 2: so I think there is movement, I don't know, it 765 00:40:52,170 --> 00:40:53,880 Speaker 2: feels like in the last four or five years nothing 766 00:40:53,880 --> 00:40:58,400 Speaker 2: much changed and maybe that's just because there's not enough time. 767 00:40:58,410 --> 00:41:02,089 Speaker 2: Um but I definitely, you know what I find really 768 00:41:02,090 --> 00:41:05,850 Speaker 2: interesting is I see more women on these shows, I 769 00:41:05,850 --> 00:41:09,390 Speaker 2: see more women quoted in financial articles, I see more 770 00:41:09,390 --> 00:41:11,359 Speaker 2: of them on cover. So maybe part of it is 771 00:41:11,360 --> 00:41:13,120 Speaker 2: also I live in Singapore, so I don't see as 772 00:41:13,120 --> 00:41:13,739 Speaker 2: many 773 00:41:14,100 --> 00:41:18,120 Speaker 2: um I see more frequency of stories of this person 774 00:41:18,120 --> 00:41:20,480 Speaker 2: started a fund and she happens to be a woman 775 00:41:20,489 --> 00:41:22,920 Speaker 2: or this person had a great year and she happens 776 00:41:22,920 --> 00:41:25,770 Speaker 2: to be a woman. So it's it's interesting. I also 777 00:41:25,770 --> 00:41:30,040 Speaker 2: see it further down, I see more female analysts. I 778 00:41:30,040 --> 00:41:33,759 Speaker 2: see more female portfolio managers. I mean I'm pretty stunned 779 00:41:33,760 --> 00:41:35,460 Speaker 2: when I came here to be like 780 00:41:36,590 --> 00:41:41,420 Speaker 2: I think there's five in ASia which is 781 00:41:42,050 --> 00:41:46,009 Speaker 2: a very big number. Um you know just a little 782 00:41:46,010 --> 00:41:49,130 Speaker 2: shy of a thought which is staggering and you know, 783 00:41:49,140 --> 00:41:52,240 Speaker 2: I didn't know about that, which is fantastic. So 784 00:41:52,840 --> 00:41:55,209 Speaker 2: I like that I like those things, 785 00:41:55,750 --> 00:41:58,660 Speaker 1: it's arching in the right direction. Yeah, 786 00:41:58,670 --> 00:42:02,360 Speaker 2: it's moving, it's not moving as fast as we all 787 00:42:02,360 --> 00:42:04,830 Speaker 2: would want to do, but it's definitely moving, there's so 788 00:42:04,830 --> 00:42:08,290 Speaker 2: much more awareness and people are more cognizant, I think 789 00:42:08,290 --> 00:42:10,020 Speaker 2: more people want to be allies 790 00:42:10,650 --> 00:42:12,230 Speaker 2: and I think all of us are kind of looking 791 00:42:12,230 --> 00:42:14,759 Speaker 2: around and thinking you know, how do you move the 792 00:42:14,760 --> 00:42:16,560 Speaker 2: needle faster and bigger? 793 00:42:17,630 --> 00:42:19,090 Speaker 2: I don't know if you have any great ideas you 794 00:42:19,090 --> 00:42:19,920 Speaker 2: have to tell us, 795 00:42:20,710 --> 00:42:22,620 Speaker 1: I think what you're doing is actually the right way 796 00:42:22,620 --> 00:42:24,820 Speaker 1: of doing it and as you correctly said these things 797 00:42:24,820 --> 00:42:27,009 Speaker 1: don't happen just like that because you want it to happen. 798 00:42:27,010 --> 00:42:29,760 Speaker 1: It takes time, it starts at the school level and 799 00:42:29,760 --> 00:42:31,980 Speaker 1: the mentorship and everything that is in the education system 800 00:42:31,980 --> 00:42:34,790 Speaker 1: then sort of spills over into the network, building the 801 00:42:34,790 --> 00:42:37,590 Speaker 1: professional level and everything that I just said right now, 802 00:42:37,590 --> 00:42:40,009 Speaker 1: you know that already, so there you go. 803 00:42:40,020 --> 00:42:42,150 Speaker 2: I think that's right. I mean at one point there 804 00:42:42,150 --> 00:42:44,189 Speaker 2: were no women in colleges and now there are more 805 00:42:44,190 --> 00:42:46,320 Speaker 2: women in colleges than men. I mean not that we're 806 00:42:46,320 --> 00:42:49,200 Speaker 2: going to that goal and at one point there were 807 00:42:49,700 --> 00:42:53,280 Speaker 2: there are few female doctors or lawyers or accountants or 808 00:42:53,280 --> 00:42:57,310 Speaker 2: Supreme Court judges and now there's more and more and 809 00:42:57,320 --> 00:43:00,450 Speaker 2: you know I have the same confidence that whatever amount 810 00:43:00,450 --> 00:43:02,450 Speaker 2: of time it took will take less time 811 00:43:03,100 --> 00:43:05,780 Speaker 2: but it will eventually happen because it happens everywhere. I 812 00:43:05,780 --> 00:43:08,160 Speaker 2: mean we're much better off today than we were before 813 00:43:08,160 --> 00:43:10,240 Speaker 2: and it'll probably keep continuing. 814 00:43:11,340 --> 00:43:13,780 Speaker 1: Excellent. So Arjuna I told you before we did the 815 00:43:13,780 --> 00:43:17,030 Speaker 1: podcast that my last podcast was with Dr Doom, Nouriel 816 00:43:17,030 --> 00:43:20,660 Speaker 1: Roubini and you have to contrast this pessimism with your 817 00:43:20,660 --> 00:43:22,310 Speaker 1: optimism and I don't think I needed to tell you 818 00:43:22,310 --> 00:43:25,030 Speaker 1: that because you've done that so well. So thank you 819 00:43:25,030 --> 00:43:27,930 Speaker 1: so much for your time and super constructive insights. 820 00:43:27,940 --> 00:43:30,130 Speaker 2: Thank you so much for having me that were always 821 00:43:30,130 --> 00:43:32,090 Speaker 2: fun to have a conversation with you. 822 00:43:32,100 --> 00:43:34,230 Speaker 1: Pleasure is all mine and I want to thank our 823 00:43:34,230 --> 00:43:35,419 Speaker 1: listeners to for listening. 824 00:43:35,430 --> 00:43:38,810 Speaker 1: Copy time was produced by Kendall bridge daisy Sharma and 825 00:43:38,810 --> 00:43:42,940 Speaker 1: violently provided additional assistance. This podcast is for information only 826 00:43:42,940 --> 00:43:46,490 Speaker 1: and does not offer any specific investment advice. All 92 827 00:43:46,489 --> 00:43:49,060 Speaker 1: episodes of Covid Time are available on youtube and all 828 00:43:49,060 --> 00:43:53,150 Speaker 1: major platforms including apple, google and Spotify. As for our 829 00:43:53,150 --> 00:43:56,210 Speaker 1: research publications and webinars, you can find them all by 830 00:43:56,210 --> 00:43:59,520 Speaker 1: googling DBS Research Library. Have a great day.