Greg Jones EM Call Transcript


Joe Stein (continued): It's a horse race. And I was just curious if you might comment on that, given that one is a mature emerging market and one seems to be a regular emerging market. Greg Jones: It's a great question because India is the one large country that is entering the demographic sweet spot and will likely be in that for the next 10-plus years. And with a lot of industries that are still at a sort of pre-takeoff point or at-takeoff point. It's too early to call India a technology leader. They've excelled in IT consulting and they've excelled in pharma, and there are home grown internet companies and India is doing what it can to support and nurture those companies and trying to block Chinese competitors, which is probably a good thing because the size differential is quite significant. I think we look at them as they both can be winners. This is not a zero-sum game. Right now, they're not competing head on. The internet opportunities in India right now, a lot of them are not publicly traded. One of the best opportunities appears to be in the large telecommunications company Reliance. But it's not a time when you have to choose winners between China and India. They're both likely to be winners. It’s probably, at this point, a minor setback for some of the Indian companies that the Indian government has decided to block their apps and India blocked apps of the Chinese internet companies. They largely did that in response to the border clash that's going on in the north, but they also did it to help nurture domestic companies. Joe Stein: So, regarding the military environment over there, are they heading for a show down? Greg Jones: The border situation is interesting. Long ago, they agreed to disarm. So, there are a number of soldiers on either side of the border and there are clashes, but they've agreed, or they have agreed in the past, to keep heavy armaments away from the border. You know these border clashes have occurred for a long period of time and generally they calm down. I think it's a low probability that this develops into something more than that. It’s certainly a risk, but I think it's a low probability.

Joe Stein: You also mentioned ecommerce in India. I believe Facebook put something like $6B dollars into ecommerce. So, that must be something that you would be considering and looking at as a team? Greg Jones: Yes. We're very interested and we are participating in a direct way.

Operator: Your next question comes from Sean Jacobus.

Sean Jacobus: Hi, Greg. Good morning. Just had a geopolitical question for you. With the new national security law that China has implemented in Hong Kong, the businesses that you're looking at and the businesspeople you talk to, do you see a capital slide in Hong Kong? And if you do see a capital slide, do you know who can be the beneficiaries in Taiwan, Singapore, and Japan? Just curious if you're starting to see any movements there because I know recent Chinese national security laws have been passed. Greg Jones: Yes, thanks for the question. We've seen these episodes in the past, and the reaction generally is a lot less than what is discussed at the outset. So, initially companies discussed moving their regional headquarters to places such as Singapore and in the end, not much happens. I mean geographically, Hong Kong is still important. There’s not much that Hong Kong manufactures anymore. There's still a lot of shipping import activity, but Hong Kong is essentially a regional financial center which as time goes on is being supplanted by Shanghai. And in the long run, I don't think there will be major changes. And it's interesting how, if you look at the stock market, there was an initial reaction and then we saw the market come back quite quickly. And in fact, there is talk in Hong Kong of property prices lifting, which is exactly the opposite of what you'd expect. So, I think we need to step back before the security law, before COVID-19 and look at the trajectory of Hong Kong and it still has significance. It's favored by the Chinese for second residences or second offices. It's certainly favored by the Chinese, but the significance of Hong Kong has been in a downward trajectory and I don't think that's going to change. It is still important because of geography.

Sales Call 6/8

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