Greg Jones EM Call Transcript


Greg Jones (continued): Those kinds of growth rates, and that kind of visibility are things that we try to find in our holdings. May Poon: Alright. So, given your initial comments about emerging markets, this may imply that emerging markets may be a potentially attractive opportunity for investors seeking long-term capital growth, particularly in consumer sectors and technology. But as you know, with past market cycles the rising tide is unlikely to lift all boats equally. What areas within emerging markets are you finding the most opportunity in general? Greg Jones: A lot of trends that had been in place prior to COVID-19 have been pushed into overdrive. And some sectors in some countries where these trends had yet to even take hold, but were expected to be important in a few years, have been pulled forward quite aggressively. Brazil is one country where that's the case. E-commerce is the obvious place where we're seeing huge acceleration, but also in digital wallets in fintech, restaurant food delivery, grocery delivery, digital on-demand mobile entertainment, contact lists, everything. I would add AI machine learning at the corporate level, again already part of most companies’ plans, but pulled forward and 5G. 5G looked like it would be rolled out slowly; now it's being accelerated in many countries. And this has led us to ecommerce players in China, but also Brazil and a lot of technology enablers in Korea. The other area we have a particular interest in is edtech and there are companies all over the world that are providing effective, cost effective, space and time effective learning solutions. And in developing countries, this is critically important with the education infrastructure lacking. I guess the final thing is that there are a number of companies in traditional industries that are currently struggling, but the leaders with strong balance sheets– some of them are taking advantage of the environment and making changes to their fundamental business structure and we're watching those because even though their short-term visibility may be weak, the actions they are taking are improving their long-term growth rates. May Poon: Okay, great. Greg, you touched on the impact of COVID outside of the U.S. We U.S. investors

are hyper focused on what's happening domestically and there are clearly countries you know that are doing well and countries that are doing not so well. What are your concerns around COVID outside of the USA? In other words, where are you finding opportunities in this environment and what has you concerned? Greg Jones: Yes, it's clear that countries that acted quickly to contain the virus and to work compliance is better. China, South Korea, Taiwan. They didn't suffer the same level of decline as many other countries and have rebounded faster and their economies and corporate earnings look much better than other parts of the world. Other countries with weaker health systems–India, the African continent, those countries with leaders who were in denial early on, President of Brazil Jair Bolsonaro, for example, who now has COVID-19–have lower visibility in terms of the exit from COVID and the impact on their economies and corporate earnings is still a little bit murky. Notwithstanding that, I think it's important to underline that the response from Europe, the U.S., and other countries, including Japan and China, to support their economies has given great comfort to investors and to those even in countries where the trajectory of COVID is still somewhat unclear. So, the COVID situation is still with us and the path it takes in certain countries is likely to be different, but the support that the global economy now has underneath it isn't going to go away. So, there are two sides of the story: the economic side, and monetary support, which, at this point is slightly more important. But I don't want to diminish the fact that the countries that have acted quickest and continue to act quickly, and where individuals are now accustomed to wearing masks, the situation is much better May Poon: Let's take a few minutes to get your thoughts on China, which you’ve touched on throughout the call. You've mentioned that Chinese holdings have been an important contributor to performance this year so far and the country is one of the best performing markets in emerging markets and around the world. What is your outlook going forward given all the negative headlines around China?

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