00:00The trade has been driving sentiment in the market.
00:02I'm looking at how risk-on it is today.
00:05We have Japan, Korea up 2%, as a whole, Asia up about 1.5%.
00:10I mean, this is perhaps a reaction to how close the US and China could be in terms of
00:16the trade deal.
00:17Well, actually, you're right.
00:18I think there's a huge uplift.
00:21I think it's almost like a burden lifted up everyone's shoulders, right?
00:25Because this overhang has been there.
00:27The uncertainty of what's happening on trade regarding the US and China has impacted markets
00:32everywhere.
00:33We've had one stability here, at least in Malaysia, in coming up with an agreement.
00:38But we still need to understand what's going to happen between China and the US.
00:41So, it's too early?
00:42Are these investors jumping the gun?
00:45The 100% tariff, that's off the table.
00:48I think that's actually a positive.
00:50But where the markets settle, that's something we'd really like to see.
00:53So, it is not enough for you yet, for you to rethink or, I suppose, you know, revise your
01:01strategy going forward.
01:02I know I understand you're a long-term investor, but have assumptions changed, basically?
01:07I think assumptions have changed.
01:09First of all, I think what you've heard over the weekend is actually, it's an uncertainty
01:15removed, but there's still a bit more uncertainty.
01:18Because we have to look at the differential of tariffs between trading nations and trading
01:23blocs.
01:24And right now, where is it?
01:26Right?
01:27So, that's something that we're still looking at before we actually chart the longer-term
01:29investments.
01:30Positive signs for Malaysia as well.
01:33We have the US and Malaysia having a trade deal, also a deal on rare earths.
01:38How are you reading into that?
01:39Because, I mean, you're 60% invested in the domestic market.
01:44Yes.
01:45Well, rare earth is actually, it's very interesting, but we actually don't look at just rare earth
01:51on its own.
01:52It's kind of like a means to an end rather than an end on its own.
01:55So, we have to look at the whole ecosystem.
01:58Now, we've been looking at the semiconductor sector in Malaysia, and there's one element which
02:02is actually quite strong at, which is basically your power management chips, your mature nodes.
02:08And having an ecosystem that looks at that, we have a healthy auto sector, having magnets,
02:15having RE to actually supply that, that's an ecosystem we're trying to build, rather
02:18than just looking at rare earths alone.
02:20So, how does that translate to in terms of how you might deploy your capital to invest
02:27in the sector?
02:28Well, first of all, I think it's a global business.
02:32The processing part of the midstream of that sector is a huge amount of investment that
02:39you can't just do it on its own.
02:39It has to look at the whole ecosystem.
02:41So, what we're trying to do is trying to build that ecosystem and collaborate with anyone that
02:45can actually provide both the expertise as well as integration.
02:48Let's talk about the collaboration because it's out there.
02:52Because Zana is looking for partners in China, for example.
02:56Are you in talks, where are you with that, and what areas are you looking at?
03:00We're still focused on the ecosystem at the moment, because I'll tell you why.
03:04You know, we had an allocation to verify the amount of reserves that we have.
03:09And some of the reserves are actually in permanent forest reserves.
03:13So, we have to look at the environmental impact, we have to look at the regulatory framework.
03:18Now, even if that's the case, again, it's really building the whole ecosystem.
03:22And we need to understand which parties are actually willing to actually provide more
03:26than just an extraction of our e-covenants.
03:28In the end, though, it has to translate into growth and jobs in Malaysia.
03:35What assumptions are you making?
03:36Are there numbers that you have arrived at?
03:39How do you quantify how big this industry could be and the impact it could have?
03:45Right.
03:46First of all, we see it as additive to the current ecosystem.
03:50So, that has an immediate impact.
03:52But when you look at the RE sector on its own, I don't think it's the same as oil and gas.
03:58And the reason why is because once you mine the minerals, like supermagnets, for example,
04:02it has a long life.
04:04And therefore, what needs to be is we have to look at the technology for recycling of the used
04:09batteries and EVs or even turbines.
04:11So, that's something we look at.
04:12But I think when we look at that, it's not necessarily the industry.
04:15It's being able to be first to come up with that ecosystem that actually harnesses the
04:20natural resources that we have.
04:22OK.
04:23So, easing tensions when it comes to trade.
04:25We're also seeing easing tensions in the space of rare earths.
04:28So, how are you deploying capital right now in an environment where the Fed is expected
04:33to ease further?
04:34Well, first of all, it's not so easy.
04:38Well, there's one benefit that we have is when the Fed starts easing and whether it's
04:43two this year and one next year, etc.
04:45What we're finding is there's a lot of liquidity coming to Asia in the market.
04:49Now, I know when you actually look at the emerging markets, it's had a healthy growth
04:54year to date.
04:55Unfortunately for us, we're 60% exposed to Malaysia and Malaysia hasn't been that great.
04:59Having said that, I think we're still diversifying our returns, looking at public markets, redeploying
05:06it in the global markets, making sure that we have access to Japan, access to the European
05:11market as well as the US.
05:13And have that diversity, because it's not just a case of one market, it's still going
05:18to be volatile.
05:19And therefore, we're going to make sure that it's diversified.
05:21And likewise, private equity.
05:22I know there's a bit of delay in terms of people getting access, but that actually provides
05:28some opportunities in certain markets.
05:31For example, whether it's in Southeast Asia or even in India, where we actually look at
05:35perhaps pricing is actually more reasonable nowadays.
05:38Exposure to the private market is about 12% right now.
05:41Is there a chance that you may raise that exposure?
05:44We're looking at it.
05:45I think as prices have come off a bit, I think we're looking at opportunities and we'll
05:50deploy when it's run.
05:51What are you most excited about in the private space?
05:53You're not in private credit.
05:55We're not in private credit.
05:57And no plans to be.
06:00Again, we have to diversify the asset base.
06:03It takes us a bit longer in order to have that additional tool, so to speak, in our arsenal.
06:09And we're working on that.
06:10I'm not saying that we're not going to be there, but we're working on that.
06:13Now, as far as the sectors, like for example in Southeast Asia, there are certainly areas
06:17like whether it's healthcare or fintech, those are the ones that can still benefit from the
06:22overall growth in this region.
06:24And those are the areas that we would be looking at.
06:26And of course, in terms of AI technology, that's still huge.
06:28That's still the theme.
06:30Of course, talk of an AI bubble as well.
06:33How are you weighing all of that?
06:35Yeah.
06:36Okay.
06:37First of all, I do think, or we do think that AI will be pervasive.
06:43When you think about it, it'll be used in AI manufacturing and how cars are used.
06:49So it's quite pervasive.
06:50I think the question here is in terms of the price point and whether it's going to be a
06:54bit, like you said, a bit too frothy.
06:56Now, the potential is huge.
06:58When you look at the semiconductor sector, not just AI software, but the semiconductor sector,
07:04we anticipate it's going to grow by about 9% per annum by the end of the decade.
07:08There's still the storage required for that, and that's going to be double that even.
07:11So these are the areas where we can actually tap on when it comes to potential for investment
07:16opportunities as well as yields.
07:17Would you be looking at the Chinese markets?
07:19I mean, now that trade tensions are easing, that could potentially be the market to be in
07:24right now.
07:25Well, they have actually performed, whether it's H markets, so they have actually done quite
07:29well year to date.
07:30And again, we are exposed to that.
07:32And I think what we would like to see, and this is a long-term investor, I think when you
07:37look at China, for example, there's a huge amount of potential, while they still have
07:41to grapple with what to do with this capacity given the tariff.
07:44But remember, their consumption for GDP is actually still at 40%.
07:48I know everyone's hopeful for it to go higher.
07:50It takes time.
07:51But there's more potential for that.
07:53There's more potential for innovation.
07:54And I think what we're looking at is where to look at opportunities, perhaps around AI
08:00or the picks and shovels around AI.
08:02The biggest risk in the market right now?
08:04The biggest risk?
08:05Yes.
08:06More uncertainty because of trade and more geopolitics, though.
08:08And how are you hedging?
08:09What's the best way to hedge?
08:11Diversify.
08:12It's to diversify across all asset classes.
08:14I think that's something that we are doing.
08:16And we can make some tactical shifts as we go along.
08:20I know you're not exposed to private credit.
08:22I'm just wondering, though, how are you reading into those concerns, those cockroaches?
08:27That could be spillover effect, the ripple effects of the rest of the market.
08:30Well, what is interesting is rates, we believe, because of inflation is going to be there.
08:36Actually, it's going to be a real price to risk rather than, I would say, higher for longer.
08:43Now, for private credit, I think because of the past, banks have been fairly conservative.
08:48And cost of capital for banks is pretty high.
08:50And therefore, it's not so easy to access it, whether it's your mid-tier companies or SME.
08:55Your banks have to be more risk-averse.
08:57And this has caused a mushrooming of private credit.
09:00And I think that's why I think we are looking at that as a space going forward.
09:04But it will take a bit of time.
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