00:00The place is abuzz with innovation and people wanting to know, you know, where to invest and put their money
00:05in AI.
00:06Yeah, you're right. There's 3,000 people here, more than half are from abroad, and many are new visitors,
00:13and I think they're amazed by what they're hearing, what they're seeing, the innovation here in China,
00:18across a number of sectors, AI, clean tech, healthcare, you go on, they're just amazed.
00:24So I think that's one big topic, and we're also, but equally we're talking about all the things that are
00:27going on in the world,
00:28and that the market's kind of discounting at the moment, but could be obviously quite significant, geopolitics, indebtedness of countries.
00:36So there is two sides to the thing we're trying to do here.
00:39Has sentiment pivoted, shifted when it comes to the Chinese market and, you know, investing in the country?
00:46Well, we know the government has worked hard to continue to stimulate the economy.
00:50We see the innovation. So there's a lot of positive things that have brought back investors into China.
00:55There's also things that are still being worked on, the real estate sector slowly recovering, but it's taking time.
01:01Consumer demand still nascent. So there's a mix of things, but I overall feel that investors have been pivoting back
01:08because they see a lot of upside in the innovation that's going on in China.
01:11Well, the question really is whether China is running, because the last time we spoke, you said, you know,
01:16Asia can't be at full speed if China isn't running. Is China running?
01:21China is running faster and faster.
01:24And you see places like Hong Kong benefit from that in all the activity we've seen in the IPO market.
01:30So, yeah, I think it's a very encouraging story.
01:33I think what's changed within the last 12 months since we last spoke is actually Korea.
01:37There's been a lot of buzz in Korea, the sentiment to do with AI and chips, and it goes beyond
01:44that as well.
01:44What are you seeing on the ground?
01:46Yeah, that is an incredible story.
01:48I compare it a little bit to what happened in Japan, just the changes that the government brought to governance,
01:54also to the functioning of the capital markets.
01:56We see those same actions in Korea, and it's really put the market on fire.
02:01Now, it's driven by all the needs that the world has.
02:05That's in AI and all the hardware behind that.
02:08But it's also other sectors like defense, shipbuilding.
02:12And Korea is actually an amazing place to build those things.
02:15So, we're exactly are seeing deals, because when you take a look at the equity market in particular, right,
02:20I mean, it's basically just a few stocks that are driving the rally we're seeing in the country.
02:26Yeah, although that's not limited to Korea.
02:27We see the same in the U.S., but you're right, and that has its pluses and minuses.
02:33But one of the benefits has been it's really opened up investors' eyes to the other companies that are there
02:38in Korea
02:38that may be in the same ecosystem, but maybe not so visible,
02:42or maybe in other industries that people have also realized have a lot of upside.
02:45And when you look at a lot of those companies, there's still a lot of upside.
02:49And that's actually why people continue to be relatively positive on the market, even though it's rallied a long way.
02:54You know, when it comes to Korea and the Korean equity markets, it's pretty much driven by the retail investors.
03:00Retail has played such a big role in not just markets like Korea, but also the U.S. now about
03:0460%, and a market like India.
03:07Do you see risks in retail driving up markets right now?
03:13Well, first, I think capital markets are critical for the health of a country.
03:17So you have to have healthy capital markets.
03:20You see a high correlation between the success of a country and the strength of the capital market.
03:23And that requires both institutional investors, domestic institutional investors, international institutional investors, and retail.
03:29But anything, as in life, everything too much is not good.
03:33So some of that will have to balance out over time.
03:35But there is a lot of institutional cash in Korea that can be invested.
03:38There is increased international interest.
03:40And similarly, in places like India, you see that balance moving over time.
03:44But it's important, you're right, to make sure that nothing is excessive.
03:48So India has taken a bit of a ton in the past one year or so.
03:52It does seem like foreign investors have been making exit in such a huge way.
03:56Is the India story intact?
03:58It has always been about growth.
04:00But when you take a look at where the currency is right now, it keeps testing new lows.
04:04And the currency reflects the growth of the country.
04:08Well, the India story in our minds is intact because it's a multi-decade secular growth story about a country
04:15with 1.4 billion people, you know, growing up and creating a middle class, building out industries.
04:22So I think that's fully intact.
04:24But you're right.
04:25There are some, you know, medium-term, short-term complexities.
04:29And one of them is essentially money flowing into countries where hardware is being made for all the infrastructure build
04:37that is happening.
04:38And that is not a sector that's very dominant in India.
04:41So, and then there's the issue that the valuations haven't come down to a level where international investors have been
04:47enticed to come back.
04:48And you're also right about the currency.
04:50That is something that investors are looking at.
04:52They want to see stability in currencies.
04:55But overall, by the way, currencies is a big theme because with the increased inflation around the world, you're seeing
05:01a number of currencies sell off quite aggressively.
05:04And central banks, from really hoping to cut rates, now need to be very cautious to fight inflation.
05:12So it's not just an India issue.
05:13Talking about currencies, yes, we're seeing weakness across the board in the Indonesian rupee, in the Korean won, in the
05:19Thai baht.
05:20Is that worrying for you?
05:22I mean, might this be the catalyst for something bigger?
05:24Yeah.
05:25I think the underlying reason is worrying me.
05:27This is just a symptom of what's going on.
05:30That's essentially a world where inflation is going up because of and being exacerbated by what's happening in the Middle
05:36East.
05:37And that's feeding through in fuel, but it will be in shipping costs and other aspects.
05:41So that is fueling inflation.
05:43And we already had some inflationary pressures, just the overall indebtedness of governments, the spending on infrastructure.
05:49So I do think that is something we watch very closely and probably the most significant trigger for a further
05:56sell off.
05:56When do you see, I guess, a reversal in terms of sentiment?
06:00Because a lot of attention, a lot of capital is actually gravitating towards the U.S. now, away from the
06:06region.
06:07Yeah.
06:07And everyone's asking whether that is for real, whether AI is for real.
06:11And is it really worth all that money that's going in it and all these valuations?
06:15There's definitely an enormous amount of value in AI.
06:18So it's not like the dot-com where, you know, you put dot-com behind your name and you were
06:22worth a lot of money without a business model.
06:24So that's not what we're seeing.
06:26But it is fair to say that the innovation that we see in the U.S. in that sector is
06:31enormous.
06:32And it's creating a lot of value and people want to be part of it.
06:34And we have seen companies, including AI, in their names and doing really well.
06:39So that's why we're seeing companies, including AI, in their names and doing really well.
Comments