00:00In terms of allocating within the equity sector, we've been favoring hardware versus software for more than a year now.
00:07So we've been in Korea, Taiwan, like Summys and Chinese equities.
00:13But I think from like a pure cyclical standpoint, if you look at the soft indicators, it's been pointing out
00:18towards some kind of recovery.
00:20So we've been long basic resources and oil equities in Europe since December and it's been one of the top
00:26trades in the portfolio.
00:27Yeah. OK. So this is not a new theme. This is just something that carries on.
00:31We also see energy stocks doing pretty well this morning, up nine tenths of one percent.
00:35Do you put that in the same basket around the themes you mentioned or is there something very different happening
00:39around the energy space?
00:40I think it's twofold. So the first one is, yeah, you need basically more molecules in the portfolio versus everything
00:47software where it could be at risk from AI.
00:50But at the same time, I think there's this anticipation and well understood supply demand dynamics where we all know
00:58that oil is in oversupply, 3.6 million barrels per day oversupply.
01:02But at the same time, if you look at WTI's queue, there's clearly some geopolitical risk premium that is going
01:09on and it's acting as a portfolio hedge at a time when there's really some questions about duration.
01:15Sophie, good morning. What did you see 12 months ago that made you convinced that you should go long hardware
01:20and short software?
01:21So it's basically the fact that we didn't know where AI was going to start affecting the different sectors.
01:29I think in terms of hardware, we knew that there was going to be demand for memory.
01:36And at the same time, if you look at Korea, for example, it's been an equity market.
01:42We've been long since May last year. And it's an equity market where domestic fundamentals, the chain in corporate governments
01:48were also very attractive.
01:49So it's been really like green lights all on for some of the equity market that turned out to be
01:56as well as like on the hardware side.
01:58So how long does that hardware versus software story continue for you?
02:01So it's kind of like a hard question because there's some reluctance at this point to put like a zero
02:09terminal value.
02:10And you need to understand how long it's going to take for AI to start impacting all other sectors and
02:16have basically convinced some of the equity analysts to start putting zero in terms of like their DCM.
02:24I don't think it's coming anytime soon.
02:26Yeah.
02:26But at the same time, I feel like you need more at this point, more distinction between the AI winners
02:33and the AI losers.
02:34But when you look at the domino effect throughout sectors, it feels like it's more entire sectors that are affected
02:40one after the other.
02:42So we started with India software and then the banking sector and then like the shipping companies.
02:49So I think you need to do this to settle.
02:53What could save us, I think, in terms of like the white colors is the fact that some companies could
02:59be a bit more inflexible and a bit slow in adopting AI.
03:03So I think you need to do this to settle.
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