00:00Kevin, Eric was just showing us how Tigers only holds three companies, three securities.
00:05How is that the norm? Can you expand to 15 or 20 if you wanted to?
00:11Sure. Well, as Eric said, there's a large trend towards more narrow focused ETFs, DRAM as an
00:19example of that. And so this is focused just on the large language models from China,
00:25the real AI companies. If you think about AI, we had electricity before, we had data centers before,
00:32we had semiconductors before. It's the model layer that's really key. So yes, it's very narrow.
00:39There's three holdings today. They're incredibly volatile. They're very risky. None of these
00:44companies are making money. Alibaba is a shareholder in all of the leading models in China and also has
00:52the most downloaded model. And in terms of new companies, we'll start looking for private shares
01:00or exposure to both DeepSeek and Moonshot, the Kimi K3 people, both of which are already registered
01:06to go public in the coming six months or so. So here in the US, obviously, we know AI. There's
01:13a couple companies. Everybody's worried it's going to be a problem for humanity. Let's go to China.
01:19How is AI going over there? And will there be enough for many winners to include these companies
01:27from other countries? Sure. Well, right now, of course, everyone knows Chad, GPT, and CLOT,
01:33but the China models, they're a lot different in one important way, which is they're open. They're
01:39open weight models, which means that companies can download them. They can customize them. They're
01:45getting better and better. They're basically catching up with our frontier models. And most
01:50importantly, they're a lot cheaper. They're about 90% less expensive. And also, they're getting
01:58used. People don't realize about 80% of the US startups are using China open models. And that
02:05includes Airbnb. That includes Cursor. And so in terms of how will they make money? And we don't even
02:14know if our bottles will ever make money. But I think there's certainly reason to be optimistic
02:18about them. So it sounds like this fund, Tigers, is effectively a hedge against the domination
02:22of American AI labs like Anthropic, like OpenAI, and their closed models. What do US-focused investors
02:30who want to get a piece of Anthropic or OpenAI tend to misunderstand or miss out on about the Chinese
02:36AI labs and their prospects?
02:39Well, I think their prospects are good. And I think what I don't think people really realize
02:44how much these models are already getting used. I mean, you can access these models at AWS,
02:49for example. As mentioned, the token use of China models by American companies, China token
02:57use passed the US token use in the last few months. So, you know, the tech world certainly knows
03:02what's going on. The investment world may not yet. And let's go to EMQQ, which is your big hit ETF.
03:10Let's just check in on that. I see it's $200 million, had like a huge run up, kind of came
03:15down a little bit. It's still up since inception. Is the story there still intact? And how much is AI
03:20shaping overall EM? That story is as good as ever. It hasn't performed very well. I mean, basically,
03:27the MAG-3 of emerging markets, TSMC, Hynix, and Samsung have sort of taken all the air out of
03:34the room. But the revenue growth continues. The earnings growth continues. The EMQQ has never
03:39been cheaper. The peg ratio now is about 0.5. And I think what the market is thinking is that
03:46these aren't AI companies or they're software companies like Adobe, and they're going to get
03:51threatened by AI. But the reality is the EMQQ portfolio are platform companies. And if you
03:58look at where AI is going to get to eventually, it's that application layer, the return on investment
04:03layer where all of the money for the data centers has to get made in terms of profits. And Alibaba,
04:11Tencent, Baidu, those companies in particular are extremely well positioned. Alibaba is in many ways
04:17the leading AI company now in China, both at the data center level, definitely competitive at the
04:24model level. And then finally, that application layer is what we owe. And I think that you're
04:30starting to see this Mercado Libre, for example, the largest Latin American holding. They've had
04:36revenue acceleration because of AI. So the EMQQ story is as good as ever, but the market certainly
04:43hasn't liked it in the last 10 months. Kevin, how does an EMQQ or a Tigers fit into your portfolio?
04:49Is it as hot sauce to existing EM exposure? Is it as a replacement in place of EM or international
04:55exposure? Well, I think EMIQ is a good replacement for the traditional broad indexes. And I certainly
05:04felt that way historically. But as I talk about a lot, emerging markets have changed. There's really
05:12growth now. It's very narrow. It's basically just those three companies. So there is some
05:17growth. But EMQQ should definitely be a satellite position or a completion part of your EM exposure
05:25because a lot of the companies like Mercado Libre, they're not even in the iShares or Vanguard
05:29funds. So you're missing a lot of these companies as well.
05:32So you'll see you soon.
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