Full transcript
Introduction
0:05Hello and welcome to this very special
0:07episode of Geo interview with Miss Alice
0:10Wong.
0:11She is a certified financial analyst.
0:14Uh she is a finance professional and
0:16investor.
0:17She's a regular contributor to media
0:19outlets such as CNBC, Financial Times,
0:21Bloomberg, and Nikkei Asia on
0:23geopolitical and economic topics.
0:26Uh
0:26her fund, the Bamboo Asia Pacific
0:29excluding Japan, was awarded gold in the
0:32Fund Selector Asia Awards in 2020.
0:35So Alice, it is great to have you here.
0:36Hope you are doing well.
0:38>> Great. Yeah, thank you so much for
0:40having me. It's great to speak to uh our
0:43Indian friends
0:44um in a very important continent.
Journey into Global Investing
0:47>> Right.
0:48So Alice, could you please introduce
0:51yourself and tell our audience about
0:52your background and how do you become an
0:54investor focusing on Asia Pacific
0:56market?
0:58>> Yeah, so I uh was born in China. I went
1:01to Yale University. I studied
1:05Chinese intellectual history and then I
1:09was asked to join a fund in Hong Kong
1:13uh which was run by Robert Lloyd George
1:15and uh
1:16and I got my CFA during that time and I
1:19ended up taking over that fund and
1:22running it from London and I ended up
1:24launching another strategy that was
1:26focused exclusively on China markets. Um
1:30and uh so I run two strategies over the
1:33course of uh
1:359 years and 2 years ago uh there was a
1:40kind of uh
1:42risk call with the custodian
1:45um
1:46after which I decided that I I had a
1:50couple of the things I wanted to do with
1:52my life and [snorts] I wanted to explore
1:54and that I could always come back to
1:57running public markets if I wanted to.
2:00So,
2:01at the moment after that I took a break
2:04to
2:05I advise family offices right now.
2:08I advise two
2:10in in in main in focus and
2:13and I advise on private investments on
2:16infrastructure investments on M&A and
2:20I'm still doing a lot of China periphery
2:22work. But I'm trying to do it in a
2:26different way than
2:28what I did for 9 years which was check
2:30stock markets for every single day a
2:33million times and I think uh
2:37you know, I I even this year I think
2:39some people ask me
2:41do I want to go back and run a fund for
2:44them and it's something I think about a
2:47lot and I haven't made any, you know,
2:49decisions. The other thing I really
2:51wanted to focus on was I I had a
2:53lifelong dream of being an opera singer.
2:56So, I have two diplomas in singing now
2:59and I've been making great progress on
3:02that. So, I think I I I've I've I've
3:06developed a lot of different sides and
3:10that was by design. That was something I
3:11really wanted to do. So, yes, I still do
3:14a lot of investing. I get asked a lot.
3:17I'm still advising a lot of people on
3:19Asia, but I wanted my life to have more
3:22than just being a fund manager.
AI IPOs: OpenAI, Anthropic & the Valuation Debate
3:25>> That's great.
3:26So, the global market is currently in a
3:29frenzy around artificial intelligence.
3:33What do you think about the latest wave
3:35of IPOs in this space? Do you think that
3:37the current valuations are justifying
3:39the future value?
3:42>> Um
3:43I think So, we're talking about three
3:45IPOs in particular. So, SpaceX,
3:48Anthropic and Open AI. Um, think SpaceX
3:51is in a slightly different category,
3:53although a lot of their
3:55you know,
3:56sales are actually
3:58chip related as well. But
4:01but for open AI and Anthropic,
4:04I think that it's in a different bucket
4:06because their the competitive landscapes
4:08are much more intense than SpaceX at the
4:11moment. And I think that that's very
4:14that's very difficult to understand
4:17going forward because we're looking at
4:20you know, valuations that are pricing in
4:22the dominance that they have now. But
4:24the Chinese models are about six months
4:26behind and they continue to catch up
4:29with very strict limitations. And the
4:32Chinese models don't charge,
4:35you know, and so is there you know, if
4:38if if Western models are always six
4:40months ahead, then you know, maybe that
4:43distance will always exist, but do we
4:45reach a point of convergence at which
4:47the Chinese models are one month behind,
4:49you know, like zero months behind, maybe
4:51even ahead and they're still open
4:53source, right? Then then what is their
4:55pricing model going to be, right? And
4:57the other question I would really ask
4:59is, you know, we have had an
5:02unprecedented
5:04kind of infrastructure
5:06investment boom led by money that these
5:11companies haven't raised yet, right? Or
5:12not haven't made yet. They've they've
5:14only raised it and and raised it off the
5:16back of these
5:18huge valuations that are about to be
5:20checked by the market for the same
5:22for the first time. And those
5:25that infrastructure investment has
5:27already been priced into the rest of the
5:29market, the the physical infrastructure
5:31companies, the
5:33actual chip companies that are getting
5:35the money from investors having invested
5:38at huge valuations. So so that is a big
5:42question is if the valuations are
5:45impacted on when they go public and
5:49there's more competitive scrutiny then
5:51what happens to this
5:53you know, indiscriminate kind of
5:55infrastructure investing that's almost
5:57like a circular loop. Um, I know Nvidia,
6:00they they invest in a lot of companies
6:03that are ultimately going to be big
6:05buyers of their chips, right? So, it's a
6:07completely circular
6:09um, economy. And so, that's I think the
6:12greater question. Um,
6:14I won't talk about Space X in this
6:15because I think it's a very different
6:17model and it's and and and most of its
6:19valuation is from Starlink. Uh, but
6:22where I'm, you know, on the on the two
6:25AI companies and increasingly more, uh,
6:28I have some serious questions about the
6:30competitive landscape and the impact on
6:33the kind of circular economy that's AI
6:35right now.
TSMC, Taiwan & the Geopolitics of Semiconductors
6:37>> So, you talked about semiconductors.
6:39Uh, TSMC has been, of course, one of the
6:42biggest, uh, uh,
6:44stakeholder in the whole AI economy.
6:47Uh,
6:48has it become arguably the most
6:49systematically important company in the
6:51global finance? And, uh, do you believe
6:53markets are undermining the geopolitical
6:56risk around Taiwan?
6:59>> Uh, I think you can think about it in
7:01the opposite way that, you know, because
7:03TSMC is so important and so difficult to
7:06replicate that it actually becomes a
7:08great security,
7:10um, you know, mechanism for Taiwan as a
7:13country. Uh, they have no incentive to
7:17move their chip, um, production to the
7:20US because the more Taiwan is important
7:24vis-a-vis this company, the less it is,
7:27um, you know, you I mean, you could make
7:29a lot of arguments. Someone could say,
7:31"Oh, well, China could just invade and,
7:33you know, but it invasion
7:35takes a lot of capacity off the ground,
7:38you know, like there's there's there's a
7:40lot of other risks when that comes. And
7:42so it is it is very um it's very
7:47important.
7:48Um
7:49is it underpriced? I would actually say
7:52that it keeps Taiwan probably a little
7:53bit safer. That would be my perspective.
7:56And for sure TSMC is not going to be um
8:00trying to shift much more of the chip
8:03production abroad even if it were
8:05possible. So that would be my my view on
8:07that.
Southeast Asia, India & Emerging Market Opportunities
8:12>> So
8:14where does Southeast Asia stand in your
8:17current portfolio mix?
8:18Where do you see Southeast Asia?
8:21>> Uh I I think Southeast Asia is like not
8:24very well insulated from the oil price
8:27volatility. Um so and all the supply
8:30chain disruption. So I'm actually I mean
8:33it was never a big part of my portfolio
8:36anyways because
8:38>> [clears throat]
8:38>> to be honest there were just not that
8:40many good listed companies
8:42um on on any of the exchanges in
8:44Southeast Asia. And there's a lot of
8:46you know specific dynamics regarding
8:50different countries like Philippines is
8:52kind of dominated by five companies, you
8:55know, five families even. Um Indonesia
8:58has a lot more consumer
9:01uh but you know, it's it's it's pretty
9:03basic. There was this company in
9:05Singapore called
9:07SEA commerce uh that that everyone was
9:10invested in. So that was kind of an
9:12anomaly. But there there were just not
9:13that many options. And now that with the
9:16oil price and you know, a lot of these
9:19countries going back to like four-day
9:20work weeks, three-day work weeks. I I
9:22think there's just too much
9:24uh like risk. Um so we go back in these
9:26times to the bigger bigger countries
9:28like China. Um you know, countries that
9:32are more equipped to deal with
9:33volatility.
9:35>> All right.
9:37So do you see India's digital public
9:39infrastructure creating a unique
9:41investment mode compared to other
9:43emerging markets?
9:46>> I actually have a different like angle
9:49on this, which is um that what I see in
9:53India, like what I see with evaluations
9:55in India, is that they're often
9:57justified by companies overcoming the
10:00challenges of the lack of infrastructure
10:03or the kind of challenges of the country
10:05itself. China is a much more seamless
10:09country to get a lot of stuff done, and
10:11therefore like companies can be much
10:14more advanced like, you know,
10:16technically at advanced levels and still
10:19have much lower valuations than their
10:21equivalent one in India. And I think
10:24it's because in India it is so much
10:26harder, you know, logistically to get
10:29stuff around for the first place. Um
10:31it's harder to have like a stable
10:33electricity supply. It's hard, you know,
10:36the it's harder to work across a country
10:39that's very difficult in terms of
10:43languages that are spoken, religious
10:45diversity,
10:47um you know, like eating habits, um and
10:50that comes from an operational
10:52perspective within the companies and to
10:55the consumer market. Whereas, you know,
10:57in a country like China or even America,
10:59you have much more stable, reliable
11:02infrastructure,
11:04uh much more um
11:06uh you know, cohesive
11:08languages, cohesive people, cohesive
11:11kind of mindset in terms of how people
11:13work and how they behave and what they
11:15expect and
11:17um
11:18and I think I think that that the
11:20the companies that do are able to, you
11:24know, get past all these challenges
11:26actually have a significantly greater
11:28mode. And what you're you're about in
11:31terms of yes, it it was a step towards
11:33the government
11:35you know alleviating some of these
11:37structural issues, but I don't actually
11:39see that that helps on a
11:42you know apples to apples basis on the
11:44individual level. Maybe it helps the
11:46macro level economy work better,
11:49but I actually think that like the more
11:51the the more the government does to
11:53resolve its structural risk, the more
11:56competition you have in a country. You
11:59know, in China for any industry you have
12:02hundreds if not thousands of competitors
12:05and you just don't have the same same
12:07kind of like competitive pressures in in
12:10India
12:11you know, for for quite a lot of
12:14industries.
China's Global Expansion, Green Tech & Exports
12:17>> So in a recent interview you noted that
12:20Chinese entrepreneurs are investing
12:22heavily outside China.
12:24Especially in Middle East and Africa.
12:26So where are what are the specific
12:28sectors they are looking?
12:32>> Um
12:33I
12:34I don't I mean I think if you look at
12:36Chinese exports this year first quarter,
12:39you know, they were up 16 17%
12:42year-on-year. So Chinese exports
12:44continue to be
12:46the most like strong most sparkling side
12:50of the Chinese economy.
12:52That you know, it's kind of like the US
12:54jobs number. It keeps on growing even
12:57though people say it's not going to
12:58grow. You know, China now has another
13:01like you like boost to its exports
13:05because the war is going to make all
13:09these countries more dependent on their
13:11own electricity own power supplies. So
13:14they all have to invest more in green
13:16technology and that is what China has
13:19been so strong at in the last 10 years.
13:21So I don't see this trend stopping
13:24anytime soon and with you know,
13:27depreciating currency from across the
13:31you know, basket of
13:33of countries including India.
13:35You know, you you will have lower
13:38purchasing power and if you have lower
13:40purchasing power, China is really the
13:42only country in the world that can help
13:44you you know, with this kind of
13:47deflation that they've been seeing
13:48internally. So, China is has is going to
13:52continue to export deflation, continue
13:54to export green technology across the
13:57world and I don't see that stopping
13:59anytime soon.
14:03>> So,
Gold, US Dollar & the Future of Safe-Haven Assets
14:06coming back to other kinds of asset
14:08classes, I think gold really did well
14:10last year.
14:12What do you think was the reason behind
14:14it and also do you think that the
14:16broader investment demand in this metals
14:19impact their role as an inflation
14:21as an inflation hedge?
14:24>> Gold tends to do well. I mean,
14:27gold is such a divisive investment
14:29because
14:31people everyone has a different opinion
14:33on it, right? Like you know, you you can
14:35talk to very sophisticated investors
14:36that are like, well, there's no way to
14:38value it. You know, I mean, there's ways
14:40of valuing it.
14:41There's lots of ways of valuing it, but
14:45you know, you could take a percentage of
14:47all the money in circulation and divide
14:48it by you know, the number of gold
14:50physical gold and that that's one way,
14:53but you
14:55I think the main point is like gold is
14:58going to be a continue to be a proxy of
15:00confidence in fiat and confidence in
15:04Bitcoin or crypto. So, anyone who has
15:08you know, lack of confidence in both or
15:12just wants to diversify is going to
15:14probably buy gold.
15:16It is it isn't need like
15:19it is probably a sentimental investment,
15:21but it's it's an investment that
15:24bets on things not working out very well
15:26in the world.
15:27Um, and so things haven't been working
15:29out very well.
15:30>> [laughter]
15:31>> You know, at like
15:33below kind of headline economic numbers.
15:35So,
15:37that's what people will invest in.
15:40>> That is right. I see that there is a lot
15:42of reserve buying of gold going on all
15:44across the world. What do you think is
15:46driving that?
15:48>> Yeah, it's it's sovereign kind of
15:51um
15:52you know, diversification from fiat US
15:55dollar currency as well. I mean, I
15:59I I think there's like probably a couple
16:01of complex arguments around this. Like,
16:05for example, people are having
16:07conspiracy theories that China will kind
16:09of move to a gold-based currency or
16:12something and then, you know, and and
16:14there's also some questions around the
16:16sustainability of US bond issuances,
16:20particularly if the Middle East is not
16:22able to sustain their buying and you
16:24know, there there's a lot of kind of
16:26things to speculate on here. Um, I I
16:30think again, it's probably just a nice
16:34diversification for sovereign
16:36governments to have, um especially if
16:40you know, if if the if America continues
16:43to weaponize the US dollar as they had
16:45with Russia, you know, um
16:49like if you weaponize a like if your
16:53currency when the basis of the US dollar
16:56regime for the last, you know, since the
16:59petrodollar emerged. Like if the basis
17:01of that was that it was always going to
17:02be a reliable currency
17:05um to hold and to spend and to trade in,
17:07and then you nuke that. Well, you're you
17:10should expect that China will create
17:14either an alternative currency system or
17:17they will resort to something that's
17:19been in circulation for thousands of
17:21years, i.e. gold.
17:23Um,
17:24you know, I I think it's it's just a
17:25it's a long-term impact of a short-term
17:27move that they did.
Asia Investing: China, India & the Biggest Market Opportunities
17:31>> So, finally, if you would challenge the
17:33one common narrative about Asia
17:35investing
17:37that you believe is kind of misguided,
17:39what would it be? Cuz most of the time
17:42when I hear Asia investing, only two
17:44scripts that come to my mind are TSMC
17:46and SK Hynix.
17:48What else is out there that no one is
17:49looking at?
17:51>> Well, you just named one company from
17:54Korea and one company from Taiwan. So,
17:56you you missed out on every single stock
17:59in China.
18:00Uh, so so so that's there's a lot of
18:04stocks there.
18:06Um, I would say one frustration I had
18:10with
18:11people
18:13looping, you know, putting all of Asia
18:15Pacific into one basket and saying,
18:17"Here, manage this portfolio." is that
18:19Asia Pacific is not like a cohesive
18:22bucket, you know, it's it's so many
18:24different completely different economies
18:27that are driven by different things like
18:29Korea and Taiwan are very driven by
18:31chips, but they they the two of them
18:33have very different approaches to how
18:35they do chips and the kind of chips they
18:37make.
18:38Um, China is probably the most advanced
18:42market in the world outside of the US.
18:45So, it's it's a huge market in and of
18:47itself. Um, Japan is a small country,
18:50but it's got huge depths, too. Um, and
18:54it requires really a lot of Japanese
18:57fluency to even get close to these
18:59companies.
19:00Um, Korean as well. Um, Southeast Asia,
19:03you're and India, you can get by with
19:05English. Uh, Australia, obviously, yeah.
19:08Keep in mind, Australia is also part of
19:10Asia Pacific. And that's a very
19:12different uh country. So, you know,
19:16like it's one thing to say, "Okay,
19:18you're a Middle Eastern investor, you're
19:19a European investor, you're a you know,
19:22American investor, you're a Latin
19:24American investor." In some ways, those
19:26regions are way more cohesive than being
19:29an Asia Pacific investor is. Now, the
19:31the benefit is that you kind of have uh
19:34built-in hedges. Like India when India
19:37does well, China isn't typically doing
19:40well. When China's doing well, India,
19:42you know, tends to They tend to be
19:44natural hedges for each other. Um
19:46um Australia has some, you know, Western
19:50geared stocks. Although, actually
19:52India's pretty correlated to Nasdaq as
19:54well.
19:55Uh well, it used to be actually, not
19:57this year. But, um you know, like so you
20:01have some built-in hedges.
20:03Uh
20:04but it they are so different. Um and so
20:08it's it's becomes very difficult to talk
20:10about Asia Pacific as a uh
20:13like as a category. And you shouldn't
20:15think about it as a category. Um I
20:18actually think if I were
20:20you know, advising a new investor to uh
20:24look at Asia Pacific, I would just say
20:27concentrate on one vertical. Um and then
20:29see how it maps across the whole region.
20:32Um
20:33and it and it might be the case that you
20:35can find one that maps across the whole
20:38region because, for example, in chips,
20:40you can put some some of the Penang
20:42companies in Malaysia in there. Um okay,
20:46you know, as in there's stocks in China,
20:48Japan, Korea, Taiwan in this basket. Um
20:53but, you know, you you you could you
20:55could do like Home Depot, you know, you
20:57could you know, there's there's quite I
20:59can think of Ace Hardware in Indonesia,
21:01you know, uh in China there's definitely
21:03Home Goods come all the consumer
21:06markets, Australia for sure.
21:08Um but, you know, I would say like focus
21:12on a sector because like it's really
21:15difficult to think about the region um
21:18and you shouldn't really think about it
21:20as like it works the same way across
21:22everything.
21:23>> So, what I hear is that you select a
21:26specific sector,
21:28look at its whole supply chain, and look
21:31where the opportunities are lying.
21:33>> Uh no, that's not what I do. I would
21:36That's what I would suggest a beginner
21:37to do. Like if if they were approaching
21:40this region, I would say start from the
21:42micro and work up to the macro. Because
21:45in the process, you'll have to learn
21:46about how Indonesia works. But, at least
21:50you might get a sense of like well, how
21:53in this process you might understand
21:54like, "Okay, well, why are the multiples
21:57so different in India versus China?
21:59Like, why for the same company in China,
22:02which is so much more advanced like from
22:04an
22:06automation perspective and everything
22:07and customers, why are their margins so
22:10much smaller versus the Indian
22:11equivalent? Why are they valued so much
22:13lower than the Indian equivalent,
22:15right?" From from that, you could
22:17probably learn quite a bit in a
22:19self-guided study of a particular
22:21sector. Like because I have worked in
22:25this region for 10 years, I don't think
22:28that way. I I would think about, you
22:29know, broader themes like what how is
22:33this, you know, how is this new how is
22:36this war, you know, going to impact the
22:39region and which areas are most exposed,
22:42which areas will benefit the most, which
22:44areas will not benefit the most. But,
22:46that requires that you already have a
22:48quite, you know, good understanding of
22:51the region and know where to drill down,
22:53right?
22:54>> Right.
22:55So, at least thank you very much for
22:57doing this. Uh we
22:58>> Yeah, you're welcome.
22:59>> host of good.
23:01>> Thank you. All right. Thanks very much.
23:03Bye.
23:03>> Bye.
23:07>> [music]