### Investment Strategies Amid China's Economic Landscape

Investors focus on long-term growth potential rather than short-term geopolitical tensions affecting China.

### Navigating China's Economic Landscape: ETF Insights and Strategic Stock Selection
* 📊 When considering investments in China, the focus is on **careful stock selection** based on company exposure and competitive pressures rather than making **broad macroeconomic predictions**.
* 💡 The ETF managed is driven by "**secular tailwinds**," suggesting that selected stocks are expected to experience **sustained growth** regardless of the economic outlook.
* 🌍 Geopolitical tensions and changing U.S.-China relations are acknowledged as risk factors, leading to **adjustments in valuation discount rates** for exposed companies.
* 💻 Artificial intelligence remains a significant theme, with **strong tailwinds allowing continued investment** in companies, even those with exposure to China, as their overall growth is **not solely dependent on this market**.
* 📈 Scenario analyses are conducted to assess the impact of potential fluctuations in China, demonstrating that companies can **adapt and reallocate resources** in response to **supply-demand constraints**.
* 💰 Long-term valuation considerations are prioritized, focusing on companies' ability to **maintain pricing power and sustain profit pools over a decade**, rather than short-term price movements.
* 🔍 The current environment presents opportunities for alpha investors to identify and invest in companies with **competitive differentiation**, while avoiding those that appear **overvalued or frothy**.

When you look at China, I know that
within the ETF that you particularly manage, there are some companies with
exposure to China. How do you feel about the economy?
How do you feel about the consumer there?
I think it's, you know, we do our stock selection
pretty carefully.

We look at where they're exposed to
rather than making a macro call. We look at what they're exposed to and
whether they have competitive pressure there.
And the we are our ETF and a lot of stocks we invest in, in broadly
speaking, are driven by secular

tailwinds.
So regardless of economic outlook, cyclically, we believe that selection
that we have, we select them carefully, will enjoy sustained growth tailwinds,
and that's how we do it one by one, really.
And when you're looking at the one by

one tailwinds, how much you have to bake
in the anxiety around a headwind of geopolitical tension of a new
administration that comes in, that makes relationships with China ever harder,
particularly for U.S. exporters?
We we certainly are not here to make any

predictions about political outcome or
policy. It's a very difficult thing for us to
do, but rather what we do is we do take into consideration in terms of risk
factors. You know, if they are exposed, we
certainly will increase the discount

rate when we think about the valuation.
But then again, it goes to one by one and see how they are positioned.
Okay. Well, when we're talking, therefore,
more thematically. All the tailwinds for you still all
about artificial intelligence, whether

or not a particular chip maker has a
large exposure to selling their very high-end chips into China.
The tailwinds are so strong that at the moment you can still stick by these
names. I know you can't go into individual
selections, but I mean, we've all been

talking about video this week, for
example. When we look at these companies, what we
look at is the overall exposure. So China is part of it, but China is not
the sole driver for the growth. So when we look at and we can see, you
know, the media, for example, China is

part of that business, but that's not
the majority of their business. And the other part of the business is so
strong that, you know, we can do scenario analysis whether or not China
goes up or down, what does it do to the

overall?
And then given the supply-demand constraint, the constraint environment
that we're in, they can easily reallocate to other areas.
So that's kind of really how we think about it is overall geographic exposure.
Let's talk, therefore, about the hype

cycle that we've been in, the huge
valuations baked into certain exposed names.
You're comfortable with that at the moment.
You feel that the demand is so strong that indeed supply issues are limited,
that you can continue to plow money into

companies that have risen so far so fast
already. What we think about it is on the
valuation front that what we care is over long term, can they sustain the
profit pool? Who has the pricing power?
I think that's what ultimately matters

in the fast growing phase.
Some of these companies will look very expensive, but we really need to look
out over the ten-year horizon. Are they going to be the market leader?
Do they have competitive differentiation?
Therefore, they can garner a bigger part

of the profit pool.
Not every single one of those is going to be a winner.
So it's actually a great time for alpha investors, frankly.
You get to choose the one that you truly believe in, and then there are ones
that are frothy that we do not believe in

China's Tech Sector Slows Down

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Investment Strategy Regarding China Exposure

Careful stock selection based on individual company exposure to China, not macroeconomic predictions.

Focus on competitive pressure and secular tailwinds, regardless of economic outlook.

Individual stock analysis to assess sustained growth potential.

Consideration of geopolitical risks and potential impact on valuations.

Increased discount rate for companies with significant China exposure and heightened risk.

Analysis of AI and other Sector Tailwinds

Strong tailwinds in AI, even with China exposure considerations.

Assessment of overall exposure, not solely relying on China's contribution.

Scenario analysis considering varying levels of China's impact on overall business.

Ability to reallocate resources to other areas mitigates China-specific risks.

Focus on overall geographic exposure rather than individual country reliance.

Comfort with high valuations based on strong demand and limited supply issues.

Emphasis on long-term profit sustainability, pricing power, and market leadership.

Ten-year horizon analysis to assess competitive differentiation and profit pool share.

Selective investment approach, avoiding overvalued or less promising companies.