Speaker 0:
during a macro driven start to the market. We're hopefully near at the end of the beginning of the tightening cycle, the dollar has moderated. How supportive an environment is this for E. M equities?

Speaker 1:
We generally find this a very supportive environment. So there's no question we had a long held view that inflation will roll over.

Speaker 1:
And when we look at the data for the demand side in the economy as well as the supply side of the economy, we do feel quite comfortable that we will towards the second half come, you can say into an area where inflation will be shown clear indication that it is kind of normalising

Speaker 1:
and we are back to kind of a normal level. And we also believe that, uh, that will also result in a in a weaker dollar. And I think these two things will be, uh, quite supportive from a global backdrop to emerging market. It will give that kind of lower discount rate we all want, but it would clearly also give the opportunity for that liquidity boost into the A class and just being attractive. Uh, you can say a destination for receiving capital when we must assume that some

Speaker 1:
one will be looking for reallocate outside of the US. So we think generally it will be a very favourable uh, you can say global microeconomic background when we then quickly look at some of the really big movers within the emerging market itself. There's no question we do believe that China will be having a quite a strong recovery. It it's not a done deal. But we clearly see that all the data points we are seeing and the indication makes us comfortable that we'll see a strong recovery in in China.

Speaker 1:
And you say, beside China, generally most of the other large economies in the emerging market, we generally also think the underlying condition. They are quite favourable. So we do think it's a combination of you will be not too hot from a global security perspective and discount rate perspective,

Speaker 1:
and we still have a good underlying. Uh, you can say growth environment and again, equities are not expensive. We actually still find a lot of key companies being very attractively priced, so we think that's a very favourable environment. That's a

Speaker 0:
positive outlook. But risk remains. So what could what? What could happen to change your your

Speaker 1:
view. Clearly you can say that the helicopter perspective, uh, looking at risk there. There's no question geil politics is the absolute number one overriding factor and clearly the

Speaker 1:
tension around Taiwan with regards to China and US and clearly having the Russia Ukraine conflict and war running in the background, that is clearly a risk element that we cannot even say ignore. It is definitely important. Our view is clearly that this will keep on being. You can say a Cold War from the

Speaker 1:
There's a lot of tough rhetoric China and US are trying to find. You can say the new equilibrium in terms of the of the power balance, and we expect it will stay for a long time in this way. And we think that very quickly. Companies and supply chain and so on are adapting very quickly, and I think a lot of them have already adapted pretty quickly.

Speaker 1:
So we think again, eventually market will get get used to that. But clearly there is always a risk that it can flip over and and that is clearly the the big risk factor.

Speaker 0:
OK, you mentioned China earlier, reopened earlier in the year. Too much anticipation. How much of that reopening effect has fed through to earnings? Yet?

Speaker 1:
Some has, uh, but we still think there is quite a long way to go. I think the biggest effect we probably have seen in the early states was during the crisis time or covid. Time for China. I think a lot of the leading companies, they did a lot of cost cutting and optimise the business model, and they were a lot of the say Internet technology companies. They run running with a lot of what we call Moonshot kind of projects and so on.

Speaker 1:
And none of these has been moderated or controlled or even closed down. So we've seen a significant improvement on the cost side and that have actually given some good margin prices for a lot of companies and and earning surprises. So generally we have seen a pretty good earnings recovery. But it's definitely an earnings recovery where we still believe that the top line and the real revenue growth has been a little bit on, uh on on the soft side

Speaker 1:
and we do actually forecast a relative kind of strong recovery build over the next couple of quarters, so we think that will further lead to some good upside for a lot of Chinese companies. So with that in mind, we still remain very constructive

Speaker 1:
in particular. As we saw a bit of sell off a lady in the market, we actually think there is a second chance to kind of rebuild, positioning and allocate capital and still attract to return opportunities. So for that reason, we will remain a very constructive

Speaker 0:
OK, another area. You've increased exposure to the technology sector. Now there is a perception that it has been expensive. So what are your thoughts there?

Speaker 1:
Yeah, we will definitely admit that we have a historic having quite a decent amount of, uh, you can say the capital in our portfolio, uh, exposed to technology.

Speaker 1:
We do believe that it is an area where you have a lot of very strong value trading companies, and generally we do believe that over time we can find that being priced quite cheaply. So it's a good way for us to generate a return over the years. But there's no question in the last day you can say, um, 18 months take a give it has been a tough environment where clearly the global backdrop has created a lot of risk aversion and clearly some of the technicality has also been even a bit tougher than we imagine.

Speaker 1:
When that is said, we do think when we look at the market right now and again, look at you can say likelihood of economic recovery, really starting to build, but also within the technology sector. We are definitely seeing the inventory cycle really streamlining relative fast and that definitely makes us believe that we are not far away from the point. We are talking a quarter two where we will see demand and supply come back in a in a balance in key areas within the technology being memory,

Speaker 1:
it being in the foundry space and so on and again when we then look at valuation. That definitely leads us to the view that we have quite good return opportunities here. So we are still pretty comfortable where you can say relative last allocation into the technology space, OK?

Speaker 0:
And finally we've touched on Asia. But you run a global fund. Where else are you finding opportunities?

Speaker 1:
Yes, there's no question that right now we do find the North Asia part being a bit more attractive, giving valuation level and and the delta in growth and earnings are expected in the next 6, 12 months.

Speaker 1:
Um, but yes, uh, we look across the e m universe and there are definitely a lot of other areas within E. M. We also find quite attractive within Vietnam. That's a little bit of an off benchmark area for the official E M benchmark, but we still think it's heavily linked with a lot of technology outsourcing. It's also linked with the China recovery. And then there's an underlying very strong domestic consumption story there,

Speaker 1:
and we think again they have been into a little bit of a tough spot, and that has been reflected in valuation. So we think Vietnam offer a significant amount of opportunities big parts of the sea and also looks interesting, particularly areas like Indonesia and on the commodity side, where we also believe that commodity will experience a quite strong recovery into the into the second half. Um, so again, that's a good area where we have been able to identify opportunities to deploy capital, and finally you can say outside of, uh of of Asia.

Speaker 1:
Middle East is is definitely on on on fire. There is a lot of liquidity being generated from still relative high energy pricing, and that is definitely this time being you can say put to work out on the economy. And that's definitely reflected. And furthermore, we also say, within the Latin America space, we do in particular see some very interesting developments in in Mexico

Speaker 1:
that again going back to the geopolitical issue this near showing French sharing whatever we kind of call it. There's no question it feels like this time it is for real, and we have been spending quite a bit of time in Mexico lately.

Speaker 1:
And, uh, we definitely get the sense that this whole F D I investment boom and manufacturing hub that are being built now in Mexico it will be spreading as bringing the water into the broader Mexican economy. So we also feel that, uh, Mexico is having some quite interesting growth dynamics. So when you combine all of these areas, we do find that it's quite interesting. And maybe lastly, it's worth to mention India is always a topic that that takes a bit of tension and always perceived to be very expensive.

Speaker 1:
But again, we have lately see, uh, you can say a bit of a sell off in in India so suddenly getting valuation level back to quite interesting areas. And we are actually on the margin, really start to see both private capital and and and public money go into infrastructure and investments and start to have that kind of cab coming.

Speaker 1:
And also, we're not far away from a new election cycle. So again, when we also put that in, it's also hard to be in negative on on right now. So we'll say Broad based. I would say we are quite optimistic. I will definitely put it that way.