April 26, 2025 • 50 mins
Trump's unexpected tariff announcements have sent global markets into a tailspin, yet beneath the chaos lies a fascinating story: Chinese tech stocks have actually outperformed their US counterparts over the past year. Why? The valuation gap is stunning—Chinese tech companies trade at just 14-15x earnings while US tech giants command 25-30x multiples.
The emergence of DeepSeek marked a watershed moment for China's technology sector. This breakthrough AI model demonstrated that China isn't merely participating in the artificial intelligence revolution but potentially positioned to lead it. For investors who've written off China as "uninvestable," this revelation demands a serious reconsideration of global portfolio allocation.
What many investors miss is how Chinese tech companies differ fundamentally from their manufacturing counterparts. These digital businesses primarily serve domestic consumers through online shopping, mobile payments, and gaming—activities largely insulated from direct tariff impacts. This domestic focus provides a buffer against trade tensions while still offering exposure to one of the world's largest consumer markets.
The AI revolution extends far beyond consumer applications like chatbots. The real transformation is happening at the enterprise level, where AI integration into existing systems is creating tremendous efficiency gains across sectors. From logistics optimization to healthcare advancements, AI is reshaping business operations globally. Most impressive is AI's coding capability, which has reached approximately 80% of human performance levels.
For those looking to capitalize on these trends, a diversified approach offers advantages over concentrated bets on the "Magnificent Seven." Consider exploring solutions like KraneShares' AGIX ETF, which provides exposure to 40+ companies across the AI ecosystem, including unique access to private AI unicorns typically reserved for institutional investors. In times of market volatility, this comprehensive strategy may help navigate uncertain waters while maintaining exposure to tomorrow's technology leaders.
Ready to rethink your global tech allocation? Explore how adding exposure to Chinese innovation might enhance your portfolio's long-term growth potential and resilience during market turbulence.
DISCLAIMER – PLEASE READ: This is a sponsored episode for which Lead-Lag Publishing, LLC has been paid a fee. Lead-Lag Publishing, LLC does not guarantee the accuracy or completeness of the information provided in the episode or make any representation as to its quality. All statements and expressions provided in this episode are the sole opinion of KraneShares and Lead-Lag Publishing, LLC expressly disclaims any responsibility for action taken in connection with the information provided in the discussion. The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Let's talk about sort of how tariffs impact China in
general.
Speaker 2 (00:04):
Well, I think tariff like what happened yesterday is
really like worse than manyanalysts' expectation right.
So because if you look at theformula right, that tariff on US
is really calculated by thetrade surplus of each country
right Vietnam and India to USand then like that 50% of that
(00:26):
is really very high compared tothe actual tariff from the other
country.
We think that's kind of like astarting point.
Then, like definitely there's alot of uncertainty for the
following week but like it'sactually like a very good
strategy, like to really givelike a extreme push pressure to
(00:48):
other counterparty and let themnegotiate and come back to you
like looking for better deals,but it is a short term
volatility.
Speaker 1 (01:07):
I am very much looking forward to this
conversation.
I recently brought onCraneShares as a client of
LeadLag Media.
This is a sponsoredconversation by CraneShares and,
given all the news aroundtariffs and the insanity around
volatility and AI, we're goingto have a lot of interesting,
thought-provoking conversationhere.
Please, folks, do me a favorlike repost, get as many people
(01:31):
to watch this as possible,because I think there's going to
be a lot of really goodperspectives here around Trump,
around investing and just ingeneral, what to do in this kind
of environment.
So, with all that said, my nameis Michael Guyad, publisher of
the Lead Lag Report.
This conversation is sponsoredby CraneShares.
Joining me is Derek Yan.
Derek, first time, you and Iare doing this as a podcast, but
(01:51):
introduce yourself.
Who are you?
What's your background?
What have you done throughoutyour career?
What are you doing currently?
Speaker 2 (01:56):
Thank you for having me, michael.
I mean, I'm senior investmentstrategist at CraneShares.
My name is Derek Yan.
I've been working forCrenshaw's over 10 years.
Before that, I was working inChina in the financial industry
for a while, Myself being astrategist in Crenshaw's
covering our technology spaceand many of our China and global
(02:17):
equities.
Yeah, so that's my backgroundLike happy to chat about like
anything investing in AI andtechnology and hopefully, like
we can have a conversationaround like how we really
navigate this market.
Speaker 1 (02:33):
Yeah, that's a lot to talk about there.
Let's talk about just theexperience level.
Speaker 2 (02:44):
So some of the things that you had done prior to
really regulate the hedge fundand private equity industry in
China, that was not like a thingin China before, but now China
introduced this idea like, oh,we should develop our own hedge
fund and private equity industryso we create like a framework
to really register all the fundsand make sure like information
(03:08):
and property disclosure.
But that's like interestingenvironment.
I did a lot of research,consulting for the firm, for
those companies as well, butthen I was working with a lot of
international hedge funds andlike investment firms where I
got an opportunity really towork with them in a lot of
(03:29):
international projects.
Then I moved to the UnitedStates.
I got my financial degree hereand joined Craneshares because
Craneshares is kind of like bothtechnology and China focused
investment firm about like 10years ago, like now we're fast
forward.
Like 10 years we've beendeveloping our strategies across
(03:51):
the world in the U?
S and national China and a lotof like alternatives, like
carbon markets, like liquidalternatives.
So it's like a lot ofstrategies like on their own.
Cranesha is on Brada now.
Speaker 1 (04:08):
As you know, china has been a hard place to make
money in, especially if you're aUS investor, really for you can
argue since the great financialcrisis in 08.
And that's not just a Chinaphenomenon, that's a
international, in generalphenomenon.
I'm curious to hear yourthoughts on how DeepSeek, in
particular, seems to havechanged the mood.
It seems like china was a bitof a sleeping giant in all this
talk around ai, and thensuddenly deep seek comes out,
(04:30):
aside from the reaction thatnvidia had that one day in
particular.
Um, ever since then, it justseems like some of the investors
have realized hey, you know,china is not only very much
involved in the space, uh, butcould be a runaway winner.
Speaker 2 (04:45):
Well, I think that's kind of like exactly what
happened People are talkingabout AI previously is only US,
because this round of the AIdevelopment is really driven by
the chat GPT moment, wherepeople realized the gen AI is
kind of like something waybeyond people's imagination,
like their capabilities, thethings they can do and the speed
(05:08):
of the involvement.
So that was kind of like backin 2022.
I would think in 2023 is likegreat year for AI become
mainstream in the US.
However, we have been talkingabout similar things because in
China, people doing AI researcha long time ago, many top AI
(05:28):
researchers and like scientistsreally are cutting edge of the
research in terms oflarge-density models, but
there's no such application likeChatGPT coming from China,
application like ChagBT comingfrom China.
But I think like, just as thoseresearch and become to real
(05:49):
business and applications, thedeep seek is kind of like a
moment people realize China hasa similar capability of doing
that kind of like technology.
Then it's kind of like a kindof re-rating for the Chinese
equity in the technology space,especially the internet stocks.
So I've seen that since thebeginning of the year that China
(06:09):
technology really outperformedthe US, starting from a year
today.
So that has kind of like areally kind of like a converge.
Think about valuation, where USdefinitely is still very strong
in earning growth but itsvaluation is much higher than
(06:29):
China at 25 plus 27, plus even,I think, 30 earlier this year.
But China is at 14 to 15 for PE, given their technology
companies at a discount comparedto the global peers.
So that's kind of like a deepseek, is kind of like a wake up
(06:50):
moment for those companies whoare really trading at a discount
for many years.
But now the forward lookingearning growth potential for
those companies really changedbecause of deep seek.
Speaker 1 (07:00):
Here's the reason I'm going to pull it up on my
screen here.
I'm looking at K, kweb right,your China tech ETF and it's
actually pretty remarkable.
I didn't realize this, but letme just share this here.
If you look at a simple priceratio of KWeb against QQQ, which
everyone always loves to talkabout, nasdaq 100, you've
(07:22):
actually, over the last year,outperformed US tech China tech
stocks right On average.
If you look at the K-Web as aproxy, why is it you think that
people are not really talkingabout that that much?
Is it just home bias?
Everyone just is so used totalk about the Qs and not
thinking about China as part oftheir overall portfolio
construction.
Speaker 2 (07:42):
I think, just like this, like US exceptionalism,
has been like here for I meantwo years now.
So people are not lookinganywhere, right?
If you talk about looking atany country besides US, people
call you up.
That's stupid why I'm doingthat.
If you talk to any, evenprofessional, institutional
investors, like people are like,oh, we should exclude anything
(08:06):
besides US.
So that is something I wouldthink now is starting to change
because there's a growthelsewhere.
Well, definitely there's agrowth in the US.
But we have, with DeepSeek anda lot of other AI applications,
ai agents happening in China,all those kind of like
(08:26):
development out of China.
You kind of see technologygrowth is kind of like beyond US
.
So I think that's kind of likewhere people are starting to
realize like there'sopportunities in China in terms
of technology investment.
Speaker 1 (08:42):
And the question of course becomes are there more or
less opportunities in China nowthat we have this seemingly
hard change in the globalenvironment because of tariffs?
That obviously is the I meanthe interesting thing about
today's action, as we're talkingabout on, you know, liberation
Day, tariff Day is internationalmarkets of China in particular
(09:04):
really actually hasn't performedthat poorly relative to US
markets, which we're talkinghere after the close down more
than 4.7% for the S&P.
China hasn't really respondedas negatively.
So let's talk about sort of howtariffs impact China in general
and then in particular, theChina tech trade.
Speaker 2 (09:22):
Well, I think tariff like what happened yesterday is
really like worse than manyanalysts' expectation, right.
So people thought like, oh,it's going to be kind of like
maybe just 10%, but it'sactually a number that people
are getting really shocked andconfused Because if you look at
(09:42):
the formula, right, that tariffon US is really calculated by
the trade surplus of eachcountry Vietnam and India to US,
and then that 50% of that isreally very high compared to the
actual tariff from the othercountry.
So we think that's kind of likea starting point.
(10:05):
Then, like, definitely there'sa lot of uncertainty for the
following week, but like it'sactually like a very good
strategy, like to really givelike a extreme push pressure to
other counterparty and let themnegotiate and come back to you
like looking for better deals.
But it is a short-termvolatility.
(10:27):
I think like going gonnacontinue in the market for a
while.
Uh, the real damage is still alittle bit like uncertain.
I think like, just like manylike trade related or macro
underrated uncertainty is likehappening in 2018.
You're talking about like firstbatch of tariffs, you're
talking about export control onchips, and so you still have
(10:49):
like a lot of market volatility.
What can happen to that is,they're going to hurt valuation,
right, they're going to hurtmultiples.
Unfortunately, just like the USmarket, as you said, like the
Q's and S&P 500, they have amuch higher valuation because
the strong growth.
So there's like a better aspect, like higher expectation on the
(11:10):
market, so that what the highervaluation become like a victim
right, because now with theuncertainty, the violations come
down a little bit.
Um, but china, on the other side, have a much lower valuation,
is already very cheap or lowervaluation, so the safety margin
is higher.
Like you cannot go much higherfrom this level given the
(11:34):
current cheap valuation.
So that's why, like you see,there's a kind of like the
impact for China technologyspace is less compared to the
global technology.
Another point I want to mentionis, like technology generally
is a growth investment.
But also look at the nature ofthe tariff is impacting trade,
right, like it's impacting trade, impacting more like retailers,
(11:58):
like manufacturers, but mosttechnology companies in China,
especially, is really focused ondomestic consumption, right,
it's like domestic revenue,people doing online shopping,
people doing like mobile payment, mobile gaming, so those
activities not much impact ontariff.
So I would think that, to thatpoint, people think fundamental
(12:20):
may be less impactful forespecially China internet names.
So just I think, like justoverall long term technologies,
the fundamentals for both US andChina technologies still very
solid, but like just theheadlines or the uncertainties,
macro risk is going to reallybring down the valuations for
both US and China, down thevaluations for both US and China
(12:42):
.
Speaker 1 (12:43):
So with the domestic consumption point for a bit,
because I think there is asilver lining to all this tariff
talk, which is it does bringinto light the point that all
these other countries can't justassume the US will be their
consumer forever, or at least atthe magnitude that has been the
case for a number of years.
One of the areas I've heardabout why China has performed a
(13:05):
lot better right relative to theUS in this facility is because
of the belief that there's goingto be some stimulus bazooka
right to try to really get thedomestic side to ramp up as
tariffs start to, you know, chipaway at some of the revenue
potential of China's exporters.
What are your thoughts on that?
(13:25):
I mean, should we, should westart thinking about it and
looking for some real targetedfiscal spend?
Speaker 2 (13:32):
I would think like first, I think people should
have noticed the background ofeconomic cycle is very different
between US and China.
So, starting from COVID, right,like there's a lot of stimulus,
like trillions of stimuluspackages from the US government
to really expand the fiscal,like spend a lot of money from
the government side and you havea low interest rate, like the
(13:54):
monetary policy stimulus fromthe US side.
So that stimulus cyclehappening in the US during the
COVID, boosting the equitymarket and all the assets in the
US.
However, in China, startingfrom, I think, 2014 or before
that, what China has done isreally deleveraged.
(14:15):
They have been really pullingthe credit from the real estate
market and creating thisdeleverage on this like called
systematic risk.
So you have kind of like aman-made, kind of like people
that just like bust a bubble onthe real estate, like, oh, the
real estate price was down like20%, like 30%.
(14:36):
That happened during COVID isthe worst time, right, you have
a COVID impact.
You have the real estate impact.
So the economy is really intolike a mini recession.
Right, you have a COVID impact.
You have the real estate impact.
So the economy is really intolike a mini recession, right,
think about how people feel andyou don't have much fiscal
stimulus like what happened inthe US, in Europe, in China,
(14:58):
because government peoplethought, oh, maybe after COVID
government started to begin tostimulus, we have that hype
September last year, right, likepeople think, oh, china could
do like trillions and trillionsof dollars like what happened in
the US, to really bring theeconomy back to the growth, but
it didn't happen.
Right, it's way less thanpeople expected.
(15:20):
So the argument back then is,like China's holding that
because they see this tariff'sgoing to come in.
So what they're going to do isreally they're going to estimate
the impact from the tariff sothey can really size the
stimulus package right.
They can really determine howmuch they need with the print
(15:43):
money or spend from thegovernment to really offset the
impact from tariff.
I think that's really rational.
So think about, like any policymaker, right, you think about
like this uncertainty from thetariff, how much they're going
to damage the export sector ofchina, like those small
factories in the south.
Then you really need to helplike very laser focus on those,
(16:04):
but as well as like the totalspending package from the
government.
So it makes more sense to forthem to do that.
Yeah.
Speaker 1 (16:10):
When I hear you say that, my mind goes to how do you
even estimate the real effectsof these tariffs if there's no
clear clarity as far as whetherTrump whipsaws the world or not?
Right, I mean, for all we know,tomorrow he could totally
change his mind and say you know, we're going to change up these
formulas or we're not going tohave as many tariffs as can be
on specific things.
How does any country properlyplan a stimulus package around
(16:32):
domestic consumption if there'sno real clarity on the policies
of the US?
Speaker 2 (16:38):
I think that's the problem.
It's a problem for everycountry and a problem for well,
you're definitely going to havelike a negotiation along the way
right, like what's the size andwhat's that?
I think, like just on the Chinaside, they're going to just
size the.
They have probably have like aplan A, plan B, plan C and,
(17:00):
based on like the realnegotiation result, they're
going to carry out those plans.
So that's kind of like morerational plans.
So far we don't hear what'skind of like the real
negotiation is happening rightnow.
But we have seen Trump isreally using oh, how about a
TikTok deal?
How about that deal likeFanatol, everything that's part
(17:23):
part of the on the table.
On the table like you're goingto have, you're going to have
eventually some negotiation.
Then China's China governmentside knows what the size of the
impact going to be.
So they're going to determinethat plan right.
So I would think that's morelike the past going forward for
China to really do stimulus.
But I think another factor is,after the years of kind of a
(17:47):
deliverance on the real estateside, things start to stabilize
in China and also all thoseinvestments into the technology
side, especially internetcompanies, there's growth
actually start to pick up comingout of the recession right,
coming out of this, those likedeleverage.
So I think China's governmentalso want to see how that's
(18:09):
going, because, of course, realestate is a big part it's
probably like 30 or one-third ofthe economy but when growth
started picking up, maybeChina's kind of.
Really we don't need such a bigstimulus to really help the
economy to grow again, right?
So so far, I think a lot ofanalysts already revisioned
(18:31):
their earning growth estimatedfor China internet name.
So that's kind of like apositive sign on the fundamental
side because of what happened,like this deep seek and AI and a
lot of the technologyinvestment.
Speaker 1 (18:42):
And talk to me about what's going on on the ground as
far as AI implementation.
I think in the US, thecriticism which is one that I
have, at least is that there isall this hype around AI and
productivity benefits, but itdoesn't seem like there's that
many companies actually reapingthe rewards of that.
Is it different in China?
I mean, are we seeing on theground in China far more AI
(19:04):
integration, far more of a linkbetween AI profit margins of
various companies?
Speaker 2 (19:10):
Well, we actually have a partner on the artificial
intelligence space in the WestCoast.
So they're kind of like AInative investors, engineers like
, who used to work like in openAI or working, and they're
autonomous driving companies.
So we have a constant like a uha dialogue with them, like on
just what happened in the U?
(19:31):
S and AI, what happened in inChina.
They have some analysts inChina as well.
So the thing we see, whathappened in AI application, is
really beyond the surface, right.
So, because what people areusing like AI is like real chat
to BT like or image generation,but that's only like fractional
of the use case for AI.
(19:52):
What's really happened like Ithink it's meaningful is really
on the enterprise level.
So there's a lot of enterprisesbeginning to like adopt AI
level.
So there's a lot of enterprisesbeginning to adopt AI.
We're talking about justtraditional inventory management
, enterprise solutions,predicting your sales and doing
logistic planning.
Those are things we call theERP or traditional use like
(20:17):
digital twin to create a digitalsystem for your company.
But now your AI can reallyadding like intelligence to that
digital twin, right you, youcan really creating a data logic
and like action intelligence toreally automate a lot of things
.
So efficiency can be massivelyimproved for a lot of retailers,
(20:40):
manufacturing and forhealthcare side, that's a lot of
AI development on the new drugdiscovery.
On the insurance, financialside, talking about policy
underwriting is really cuttingtime from two weeks to 30
minutes Things like that justcreating trillions of value.
(21:00):
I think One of the biggestthings I think we've been
talking about is really coding,because the current AI
capability in coding, theperformance is really
unbelievable.
The way the AI can code is like80% of human right, so that's
going to create a lot of likeproductivity gain for the
(21:23):
technology company.
But also it's going to do a lotof things.
I think that's kind of likeit's the early stage of AI
adoption for, like consumer sidenow, right, when, just like
similar to many technologybreakthrough in the history,
like internet technology,breakthrough in the history like
(21:45):
internet, like PC internet,mobile technology in cloud
usually started with enterpriseand then migrated to consumer
when technology becomemainstream, right.
So we are on that edge like alot of enterprises using now.
I think consumer application isgoing to come soon, especially
with the AI agent.
I think a lot of people aredoing that application.
It is similar in China.
(22:06):
There's a lot of AI agent appthat's really under development.
That's really, I think,consumers going to feel the
change, right, going to feel thedifference, because a lot of AI
agents that come like yourpersonal assistant, they can do
a lot of things for you link toyour data, link to your app, and
then they can automate a lot ofdecisions.
(22:27):
If you think about, like, book atravel if you go to anywhere,
like they can book the hotel,book the flight plan, the travel
, like logistic for you, or ifyou think about doing anything
like organizing your email, likeyou see, I don't know about you
, me, I receive like hundreds ofemails a day.
Or how do I prioritize, like,do analysis or auto reply those
(22:48):
emails.
I think there'll be agentavailable to do all this work.
How much you would be willingto pay that right?
Those are a lot of money, like,I think, consumers, enterprises
willing to pay for thosesolutions and eventually they're
going to be returned oninvestment to those AI companies
.
Speaker 1 (23:04):
Let's talk about, on the Craneshares side, agix.
I'm going to share my screen aswe're talking here.
A lot of attention around AIETFs in the US.
Let's talk about theCraneshares product.
Speaker 2 (23:22):
Well, agx is very different from many other AI ETF
, which is like just traditionalindex provider, created based
on either keyword, searchingsectors, right, like, just like,
not a way to play technology.
Agx is really leveraged on theexpertise of the venture
capitalists and the AI nativeinvestors and engineers.
(23:44):
So, like, the partner we haveis really coming from OpenAI and
all those large-scale modelcompanies, so they know which
company are really behind thiswave of Gen AI and large-scale
model, right.
So there's an ecosystem, likewhat I said, application side,
(24:05):
where it's really providingservice for enterprises and
consumers really to bring thatGen AI to real-life applications
.
Then you need infrastructureside, providing the cloud,
providing cybersecurity,providing data storage, and you
need the chips and all thosematerials to make those
infrastructure.
So this is a more comprehensiveand a holistic approach to
(24:31):
really investing in the Gen AIand large-factor model companies
and really capture or diversifylike a basket right, think
about it.
Most people investing in AIjust Mac 7, right, but that's
overly.
Most people investing in AI arejust max seven right, but
that's overly concentrated.
Like, if you just buy severalmax seven stocks as your AI play
, you are likely to get moreconcentration risk compared to
(24:54):
our 40 plus basket approach islikely to offer more
comprehensive or capture broaderopportunity from from AI in
each layer of the ecosystem.
And, more importantly, when welook at AI investment and
benchmarking, there's a criticalpart I think is missing in a
(25:14):
lot of AI ETFs is the unicornsthat are still private and is
the large-scaleash-modelcompanies.
So that's why we made our firstinvestment into a private AI
company called Anthropic.
I'm not sure if you've heard ofAnthropic.
It's the AI company behind theCloud AI Cloud.
(25:37):
They just published theirlatest Cloud 3.7 model.
It's one of the top performingAI large-tank model in terms of
coding.
They have a very large sharegain from OpenAI in terms of
enterprise adoption.
So a large-tank model companylike that is missing in a lot of
AI companies when you'retalking about this round of the
(26:00):
AI opportunities really builtaround the Gen AI and a
large-tank model.
But you don't have that in yourportfolio.
So adding that private companyinto an ETF is kind of like
innovation in the industry.
But we think that approach,like many institutional
investors in the element theyhave like a 5% to 15% investment
(26:20):
into VC, I think, just asindividual investors or
financial advisors adding aprivate company into an ETF is
like an institutional investorapproach towards the long-term
growth potential from artificialintelligence right.
Speaker 1 (26:37):
Yeah, and I certainly I'm a fan of the weightings
here relative to what you see ina lot of the other.
To your point, max seven highconcentration type of products
how do tariffs longer term ormaybe even short term impact the
AI trade?
I mean, clearly, when it comesto the US, to the extent that AI
, or rather tariffs, causevolatility.
(26:59):
The knee-jerk reaction to sellpassive indices means all the
top names, just AI or not, aregoing to get slammed.
So there's a degree of justsort of the passive pressure on
that end.
But is there anythingfundamentally that changes with
tariffs and some of thesecompanies on the AI side?
Speaker 2 (27:19):
We don't see much like fundamental damage on the
AI side because a lot oftechnology is really like you
know, like just what I'vedescribed on those solutions, on
those really new revenuegeneration right, those really
infrastructure building, thoseare really technology
breakthrough innovation thathappened previously decade right
.
Like think about the internet,the mobile technology, the cloud
(27:43):
.
That's like a decade longinvestment opportunity and we
are still at the early stage ofthat.
So I think for any peopleinvesting AI is really you have
to think about your investmenthorizon.
If you just like what happenedin previously like there's many
volatile and short-termvolatility happening on many
(28:06):
other internet era or cloud erathere's great company compounded
return over the long term right, have a very meaningful
short-term volatility.
So how do you really thinkabout that?
Right, I think it's not up forevery investor because you're
going to have those moments likewhat happened with tariff.
You're going to have thosemoments like what happened with
tariff.
You're going to have ameaningful short-term volatility
(28:26):
, but you're going to have a.
If you look at a much longerhorizon, you have to position
your portfolio where the growthsare right.
So artificial intelligence inthe long term is going to have a
meaningful compounded growth,because all the AI term is going
to have a meaningful likecompounded growth, because all
the AI innovation is going tohappen.
It's going to disrupt the wholebusiness and create a much
(28:49):
higher revenue for a lot ofcompanies going forward.
But in the short term, thatheadline risk or the trade
related tariff, that's going tohurt the multipleations and
sentiment, right.
So that's like, how do youreally justify that?
Right, I think, just bestrategic and be disciplined,
(29:10):
right?
So when you have an allocationto a long-term market, I think
artificial intelligence is agreat fit for a long-term
investment.
And I mean, like, since I'm nowdiscount right now, so
valuation is much cheaper, sofor any long-term investors,
it's actually a greatopportunity for them to buy
those assets at a discount,right?
Speaker 1 (29:31):
what is the, what's the state of sort of
consolidation when it comes toAI names, whether it's US
specific or China specific?
I mean, I don't know what goeson on the ground in China, but,
you know, are there AI companiesthat are merging and taking
over other AI technologies.
I mean, what's going on there?
Speaker 2 (29:52):
there's a lot of private like there's a lot of
private companies, I thinkpartner with the public
companies.
So basically, leverage theprivate side of the technology
breakthrough is gonna help a lotof like public companies Just
for now.
But, like I think, at Alibabathey invested a lot of like
private AI unicorns and now theycome up with their own large
(30:12):
connection model which is top onthe performance.
So I think with thatconsolidation, a lot of like
private companies they're kindof like become there's a lot of
like private companies.
They're kind of like becomethere's a lot of like startups
that are going to become likemore relier, rely on the
resources from the largecompanies right Given the market
(30:33):
volatility.
So that's kind of like a thingthat like.
China internet companies can domore with the private side to
really bring on those technologyto their use cases.
Speaker 1 (30:44):
I feel like we should talk about currency movement in
all this, especially the waythat the dollar has been
behaving relative to yields.
By the way, it used to be thecase, for example in the US,
that a strong dollar would meanyields would drop.
The last several years, it'sbeen the exact opposite, and now
the dollar is weakening againsta broad basket and yields are
(31:04):
dropping.
How does currency movementimpact the AI trade, if at all,
and, and In general with tariffs?
Can China just respond bymanipulating their own currency
further?
Speaker 2 (31:23):
Well, I think, just like you think about the goal of
Trump administration really tohow can the US really rebalance
this trade deficit.
I think the only way is reallyto depreciate the dollar right,
like have a weak dollar.
I think the only way is reallyto depreciate dollar right, like
have a weak dollar.
Think about the mechanism ofwhy there's a lot of trade
(31:43):
supplies is because strongdollar and dollar as a global
currency like when China sold alot of goods to US they keep
dollar as reserve currency andbuying more treasuries right, us
treasuries so then dollar canbecome stronger.
So that game has been going onfor a while.
(32:05):
Right, when you have a strongdollar, then trade deficit.
So I don't think, like, unlessyou have a meaningful
depreciation on the dollar, thattrade balance, trade imbalance
is unlikely to be adjusted.
So think about that.
What can happen is, I wouldthink, china likely to.
(32:28):
Really they have a huge currencyreserve in dollar, so they can
use a lot of those currencyreserve to really manage the
risk from the US side, like, ifthe US dollar is going to
depreciate, rmb is going todepreciate.
That's probably going to be partof the negotiation between US
(32:48):
and China.
So on the currency side.
But generally on the technologynames, I don't think that's
kind of like a meaningful impacton a lot of either US tech or
China tech, because currencyimpact is less meaningful when
it comes to the earnings growthand revenue growth for those
tech tech and tech names,because for US tech and tech
(33:12):
names most revenue is still fromdomestic and for China is the
same.
So I don't think that's like ameaningful impact on the
business side.
But generally like a weakeningdollar means there's like global
investors are going to their USinvestment going to depreciate,
right.
So that means likely the morediversify away from the US asset
(33:36):
.
So we have been seeing that,like in Europe, right, some like
China.
So I think if dollar continueto depreciate, that asset flow
is going to continue for a while.
Speaker 1 (33:48):
Talk to me a little bit, just high level, about
Craneshare itself.
I mean, you guys are realthought leaders when it comes to
a lot of different parts of themarketplace, but obviously you
know focus on the China sidequite a bit.
Talk to me about the depth ofexperience, expertise, how your
thoughts and research may be ormay not, may not go into the
(34:09):
construction of the funds.
Any kind of context like that Ithink would be helpful.
Speaker 2 (34:13):
Yeah, so I think we have we're like laser focused on
a lot of our research topics,especially on the technology
side, on the China side, and ona lot of our pillars of strategy
.
We have a dedicated researchteam on each pillar of our
business and we work with a lotof third parties as well.
(34:33):
Like I said, we have a venturecapitalist partner.
We partner with many otherparties in the industry to
really leverage their expertiseas well.
So it's a very comprehensiveapproach and we have teamwork.
We have monthly meetings andreally discuss a lot of our
strategic planning for theproduct, for our positioning,
(34:55):
our solutions when it comes toproduct development, for our
positioning, our solutions whenit comes to product development.
Like we think we really have tobe thoughtful on portfolio
construction, like just strike,a very well-designed index,
because a lot of our ETF isactually tracking the index.
So we have to really thinkabout, like the portfolio
(35:15):
construction, how to really bestposition ourselves in terms of
the index investment.
So that's kind of like ourapproach as a like a crunchers,
like a star leader on China,climate alternatives and
technology space.
We have been really using thatapproach to really doing
(35:36):
research and really building ourresearch into our index
products.
Speaker 1 (35:41):
Does a day like this excite the team at Craneshares
when you get this kind ofvolatility?
You know I always go back tobecause I deal with a lot of
fund issuers.
I think fund issuers like whenthe S&P goes down hard because
to some extent everyone'scompeting against that Home bias
, availability heuristic as faras the definition of in quotes,
the market.
If you're going to try to grabflows, you want to see
(36:04):
volatility.
Do you see, like, do these kindof periods get everybody even
more invigorated?
Speaker 2 (36:11):
I think it's kind of like for crane shares.
We do have a lot of well Chinasolutions and alternative
solutions for especially like amarket moment like that for risk
management.
So from a business perspective,it's definitely like a kind of
like validation for our productsolutions that you really need
(36:32):
to diversify your allocationoutside of just 100% US and you
really need to really manageyour risk, like what happened to
like institutional investors.
They have really a decentallocation to alternatives.
So from Cranesha's productsolutions, we think this is kind
of like market.
We have been really thinkingabout and offering the right
(36:55):
solution for our investors toreally create a diversified
portfolio.
Right, so, um, but like that'skind of like not common in an
industry.
I feel like most people justthink about this only.
Like sp500 is the only onlything I look at, right, that's
happened to many investors aswell.
Uh, for many, many years.
(37:16):
So common, right, like when youhave that mentality for like
every quarter, right Fourquarters a year, then that
mentality become like a fixedmindset.
So diversification is not athing like people like to
struggle, right, but like Ithink now it is very different.
(37:38):
Like when you have like microuncertainty, when you have what
do you say like currency risk ona lot of US currencies, so
that's kind of like a moment fordiversification.
So I think our business,especially our China side and
alternative side, is reallycreating that solution for
(37:59):
diversification for investors.
Speaker 1 (38:01):
Let's talk about the types of investors that go into
some of your funds.
You mentioned alternatives, youmentioned the climate and then,
obviously, we talked about AIand China here, focusing on
China and the intersection ofChina with AI, is it one of
those things where you typicallysee, for example, financial
advisors, you know, do a verysmall allocation to this part of
(38:24):
the investable landscape, youknow, somewhere in the 2-3%
range or do you see that somepeople actually take much more
aggressive bets?
Because, let's face it, thebiggest criticism around
investing in China is that it's,in quotes, uninvestable, right,
and I always go back to it'suninvestable until it's trending
up into the right and thensuddenly it's investable.
Speaker 2 (38:44):
Exactly, I think, like our business has been
involved in terms like clientbase, I think, starting the
business.
Most of our investors arereally financial advisors and
retail investors.
That's like 10 years ago,financial advisors and retail
investors that's like 10 yearsago.
But as the business involved,more and more institutional
investors are using our ETFs forChina allocation.
(39:05):
That happened especially around, I think, like it's really
using K-Web.
When K-Web's really become kindof like most liquid and very
sophisticated tool for a decentChina allocation and that's when
China's allocation become likea meaningful part of the
(39:26):
institutional investor in the USas well.
But since the start of changeI've been going like when I back
in 2018, when Trump firstturned and threw in China trade
war, I think that created a lotof uncertainty on China
investment, so our clients from,especially, financial advisor
side decreased dramatically.
(39:46):
So a lot of advisors divest toChina.
But the institutional use ofour ETF is actually increasing.
We see more and moreinstitutions using institutional
investors, especially a lot ofbig pensions, big hedge funds
even, are using K-Web as anallocation or tactical
(40:08):
investment tool.
So that trend has really, Ithink, has been going for the
past five years, but until now,I think, with the
diversification in mind.
I think the more and moreconversations around like, oh,
how can really using China fordiversification when China's at
(40:28):
such a low valuation?
And there's actually upsidewith the deep secret with the AI
adoption in the China internetnames, I think that's a
conversation that's picking up.
But, as you like, we all knowthis has been a mindset for many
, many years, so a change ofthat mindset can take longer
(40:48):
than people expected.
But I think the institutionalinvestors are happy to adopt and
change.
Then I think more and moreother type of investors are
going to follow that.
Yeah, so that's for our Chinaside, then for, I think, the
alternative side I think that'smore institutionalized of the
(41:09):
financial advisors.
I think there's a lot ofindependent advisors.
Their sides become moremanifold, so their way to
allocate is becoming more likeinstitutional investors where
alternatives, and especiallylike managed futures or hash
equity, become a bigger part ofportfolio to really creating a
true diversification for, likewhat happened, a growing
(41:32):
allocation from those advisors.
For the carbon side, it'sinteresting because it's purely
institutional.
Most investors in our carbonsolutions are institutions and
it doesn't really resonate wellon the advisor side.
(41:54):
But things are changing.
I think more and more advisorsare learning about the carbon
space and adding allocation tothe carbon.
So it's a very interesting mixof the three pillars of our
business and I haven't mentionedabout our technology.
The AGIX so far is mostlyfinancial advisors and retail
(42:16):
investors.
Given the size and the kind oflike we just launched it last
year, so you haven't becomeavailable for a lot of
institutional investors.
But we got most of the feedbackon the AGIX because our
investment into Anthropic Ithink a lot of people starting
(42:36):
to notice that as a uniquesolution in the industry,
because there's no such solutionto adding a private AI unicorn
into an ETF like that.
So that's the picking up amonginvestors who want to get access
to that part of the investment.
Speaker 1 (42:56):
What do you think most people get most wrong about
investing in China?
I know it's a broad statement,but there's always
misconceptions, right?
So, from the kinds of peoplethat you talk to, the kinds of
things that you see, what do youthink is the thing that most
get wrong?
Speaker 2 (43:12):
I think a lot of people just thought, like, when
there's a cycle anywhere,there's a cycle in China.
So a lot of people think Chinais all in West Boat because of
politics, because ofgeopolitical, but end of day is
economic cycle.
So we have seen that cycle isdown.
Now the cycle is picking up.
The violation is down, nowviolations should pick up.
(43:34):
So just every country, there'snormal normalization, there's
main convergence, um.
So that happened in the us,that happened in china, um.
So we think, like always, likepeople usually just focused on
media, focused on macro, focusedon geopolitical event, but like
(43:54):
, end of the day, it's aboutearnings, it's about like
earning growth, it's aboutearnings, it's about like
earning growth, it's aboutmultiples.
So I mean like I think that'skind of like first thing people
get around because, end of theday, china's investment.
Those are companies that justlike listed by well, like just
managed by, like entrepreneurslike you and me.
So basically, that's a business.
(44:16):
You have to evaluate thebusiness investment like many
other business in the world.
Second thing I would think isthe misconception in the
innovation in China.
A lot of people think like Chinais kind of like industrial
right, like we're manufacturingduring the economy, like
(44:37):
industrial right, like we'remanufacturing during economy.
But when you look at like thedemographic in China, people
always talking about agingpopulation but people didn't
notice there's a generationevolution, I would say, because
the younger generation and theprevious generations are totally
different.
Generation, I would think,because think about like the
(45:00):
people about 40s in China, theirwhole background when they grew
up is kind of like when Chinahas not much education, there's
not much industrial, there's notmuch international access.
But the younger generation ismuch behavior, like a Western
mindset, with tons of access tointernet, to innovation,
(45:21):
education.
We're educated a lot of likecollege degree, graduate, uh,
engineering degree and they'vebeen like very uh focused on
innovation and um creating likenew business models.
So that generation shift isgradually happening because
those younger generation becomecome like the main labor force
(45:44):
and the business owners wereChinese companies and that's
going to create a dramatic shiftin the economy because people
are different, people's mindsare different, people's ability
is scope, their way of doingthings that are totally
different now.
So that makes China aninteresting place where you have
a different group of people.
(46:05):
Becoming the mainstream isgoing to create, I think, like
tons of innovation andinvestment opportunity for the
global investors.
Speaker 1 (46:15):
There for those who want to track more of
CraneShares' research and learnmore about your funds in general
.
Where would you point them toand then maybe provide some
final thoughts for those thatjust want some calmness after
such a crazy day?
Speaker 2 (46:29):
Oh well, like anyone who want to follow our research
can go to cranesharescom for theAGIX fund.
Like you can go tocranesharescom slash AGIX fund.
Like you can go to crinciouscomslash AGIX.
And, as I said, like I think,just when you have like this
moment, like today, I meanpeople feel pain, right, feel
(46:50):
like fearful.
You know it's like our brain islike animal, right, when you
see the market going down, youjust feel that like painful and
you're gonna escape, right.
But I think, like there's manymoment like this in history
before and after a while, after,after all the headlines, after
(47:10):
all this macro uncertainty, um,in the long term, it's the
weighing machine on the earnings, right, so the earnings is
still good, um, I mean, likethose businesses still doing
great, like they're beinginnovated, they've been
developing new products, they'rebeing, uh, generating new
revenues and creating a solutionthat's really meaningful for, I
(47:31):
think, human beings and you andme.
Um, so those are great businessto own in the long term, right?
So the short term is creatingvolatility but also a buying
opportunity, because those aregreat business to own in the
long term, right, so the shortterm is creating volatility but
also a buying opportunity,because those are now think
about like a business is atdiscount, so you should buy the
business at discount.
So if you think about a way, ifyou think of a way of investing
(47:53):
like that, you'll feel morecomfortable about the market
today, right?
Speaker 1 (48:00):
Very well said, appreciate those that watched
this live stream.
This will be an edited,webinar-sized podcast available
on LeadLag Live on all yourfavorite platforms.
Again, this is sponsored byCraneshares.
Hopefully you'll do this againwith Derek, maybe on a more calm
day, although, who knows, Idon't mind.
Being in an age of turbulence,I think that's where the real
(48:22):
interesting strategies start tostand out.
So thank you Derek, thank youbuddy, I'll see you next time.
Speaker 2 (48:27):
Thank you, Michael Cheers, everybody.
Let's talk about sort of how tariffs impact China in
general.
Speaker 2 (00:04):
Well, I think tariff like what happened yesterday is
really like worse than manyanalysts' expectation right.
So because if you look at theformula right, that tariff on US
is really calculated by thetrade surplus of each country
right Vietnam and India to USand then like that 50% of that
(00:26):
is really very high compared tothe actual tariff from the other
country.
We think that's kind of like astarting point.
Then, like definitely there's alot of uncertainty for the
following week but like it'sactually like a very good
strategy, like to really givelike a extreme push pressure to
(00:48):
other counterparty and let themnegotiate and come back to you
like looking for better deals,but it is a short term
volatility.
Speaker 1 (01:07):
I am very much looking forward to this
conversation.
I recently brought onCraneShares as a client of
LeadLag Media.
This is a sponsoredconversation by CraneShares and,
given all the news aroundtariffs and the insanity around
volatility and AI, we're goingto have a lot of interesting,
thought-provoking conversationhere.
Please, folks, do me a favorlike repost, get as many people
(01:31):
to watch this as possible,because I think there's going to
be a lot of really goodperspectives here around Trump,
around investing and just ingeneral, what to do in this kind
of environment.
So, with all that said, my nameis Michael Guyad, publisher of
the Lead Lag Report.
This conversation is sponsoredby CraneShares.
Joining me is Derek Yan.
Derek, first time, you and Iare doing this as a podcast, but
(01:51):
introduce yourself.
Who are you?
What's your background?
What have you done throughoutyour career?
What are you doing currently?
Speaker 2 (01:56):
Thank you for having me, michael.
I mean, I'm senior investmentstrategist at CraneShares.
My name is Derek Yan.
I've been working forCrenshaw's over 10 years.
Before that, I was working inChina in the financial industry
for a while, Myself being astrategist in Crenshaw's
covering our technology spaceand many of our China and global
(02:17):
equities.
Yeah, so that's my backgroundLike happy to chat about like
anything investing in AI andtechnology and hopefully, like
we can have a conversationaround like how we really
navigate this market.
Speaker 1 (02:33):
Yeah, that's a lot to talk about there.
Let's talk about just theexperience level.
Speaker 2 (02:44):
So some of the things that you had done prior to
really regulate the hedge fundand private equity industry in
China, that was not like a thingin China before, but now China
introduced this idea like, oh,we should develop our own hedge
fund and private equity industryso we create like a framework
to really register all the fundsand make sure like information
(03:08):
and property disclosure.
But that's like interestingenvironment.
I did a lot of research,consulting for the firm, for
those companies as well, butthen I was working with a lot of
international hedge funds andlike investment firms where I
got an opportunity really towork with them in a lot of
(03:29):
international projects.
Then I moved to the UnitedStates.
I got my financial degree hereand joined Craneshares because
Craneshares is kind of like bothtechnology and China focused
investment firm about like 10years ago, like now we're fast
forward.
Like 10 years we've beendeveloping our strategies across
(03:51):
the world in the U?
S and national China and a lotof like alternatives, like
carbon markets, like liquidalternatives.
So it's like a lot ofstrategies like on their own.
Cranesha is on Brada now.
Speaker 1 (04:08):
As you know, china has been a hard place to make
money in, especially if you're aUS investor, really for you can
argue since the great financialcrisis in 08.
And that's not just a Chinaphenomenon, that's a
international, in generalphenomenon.
I'm curious to hear yourthoughts on how DeepSeek, in
particular, seems to havechanged the mood.
It seems like china was a bitof a sleeping giant in all this
talk around ai, and thensuddenly deep seek comes out,
(04:30):
aside from the reaction thatnvidia had that one day in
particular.
Um, ever since then, it justseems like some of the investors
have realized hey, you know,china is not only very much
involved in the space, uh, butcould be a runaway winner.
Speaker 2 (04:45):
Well, I think that's kind of like exactly what
happened People are talkingabout AI previously is only US,
because this round of the AIdevelopment is really driven by
the chat GPT moment, wherepeople realized the gen AI is
kind of like something waybeyond people's imagination,
like their capabilities, thethings they can do and the speed
(05:08):
of the involvement.
So that was kind of like backin 2022.
I would think in 2023 is likegreat year for AI become
mainstream in the US.
However, we have been talkingabout similar things because in
China, people doing AI researcha long time ago, many top AI
(05:28):
researchers and like scientistsreally are cutting edge of the
research in terms oflarge-density models, but
there's no such application likeChatGPT coming from China,
application like ChagBT comingfrom China.
But I think like, just as thoseresearch and become to real
(05:49):
business and applications, thedeep seek is kind of like a
moment people realize China hasa similar capability of doing
that kind of like technology.
Then it's kind of like a kindof re-rating for the Chinese
equity in the technology space,especially the internet stocks.
So I've seen that since thebeginning of the year that China
(06:09):
technology really outperformedthe US, starting from a year
today.
So that has kind of like areally kind of like a converge.
Think about valuation, where USdefinitely is still very strong
in earning growth but itsvaluation is much higher than
(06:29):
China at 25 plus 27, plus even,I think, 30 earlier this year.
But China is at 14 to 15 for PE, given their technology
companies at a discount comparedto the global peers.
So that's kind of like a deepseek, is kind of like a wake up
(06:50):
moment for those companies whoare really trading at a discount
for many years.
But now the forward lookingearning growth potential for
those companies really changedbecause of deep seek.
Speaker 1 (07:00):
Here's the reason I'm going to pull it up on my
screen here.
I'm looking at K, kweb right,your China tech ETF and it's
actually pretty remarkable.
I didn't realize this, but letme just share this here.
If you look at a simple priceratio of KWeb against QQQ, which
everyone always loves to talkabout, nasdaq 100, you've
(07:22):
actually, over the last year,outperformed US tech China tech
stocks right On average.
If you look at the K-Web as aproxy, why is it you think that
people are not really talkingabout that that much?
Is it just home bias?
Everyone just is so used totalk about the Qs and not
thinking about China as part oftheir overall portfolio
construction.
Speaker 2 (07:42):
I think, just like this, like US exceptionalism,
has been like here for I meantwo years now.
So people are not lookinganywhere, right?
If you talk about looking atany country besides US, people
call you up.
That's stupid why I'm doingthat.
If you talk to any, evenprofessional, institutional
investors, like people are like,oh, we should exclude anything
(08:06):
besides US.
So that is something I wouldthink now is starting to change
because there's a growthelsewhere.
Well, definitely there's agrowth in the US.
But we have, with DeepSeek anda lot of other AI applications,
ai agents happening in China,all those kind of like
(08:26):
development out of China.
You kind of see technologygrowth is kind of like beyond US
.
So I think that's kind of likewhere people are starting to
realize like there'sopportunities in China in terms
of technology investment.
Speaker 1 (08:42):
And the question of course becomes are there more or
less opportunities in China nowthat we have this seemingly
hard change in the globalenvironment because of tariffs?
That obviously is the I meanthe interesting thing about
today's action, as we're talkingabout on, you know, liberation
Day, tariff Day is internationalmarkets of China in particular
(09:04):
really actually hasn't performedthat poorly relative to US
markets, which we're talkinghere after the close down more
than 4.7% for the S&P.
China hasn't really respondedas negatively.
So let's talk about sort of howtariffs impact China in general
and then in particular, theChina tech trade.
Speaker 2 (09:22):
Well, I think tariff like what happened yesterday is
really like worse than manyanalysts' expectation, right.
So people thought like, oh,it's going to be kind of like
maybe just 10%, but it'sactually a number that people
are getting really shocked andconfused Because if you look at
(09:42):
the formula, right, that tariffon US is really calculated by
the trade surplus of eachcountry Vietnam and India to US,
and then that 50% of that isreally very high compared to the
actual tariff from the othercountry.
So we think that's kind of likea starting point.
(10:05):
Then, like, definitely there'sa lot of uncertainty for the
following week, but like it'sactually like a very good
strategy, like to really givelike a extreme push pressure to
other counterparty and let themnegotiate and come back to you
like looking for better deals.
But it is a short-termvolatility.
(10:27):
I think like going gonnacontinue in the market for a
while.
Uh, the real damage is still alittle bit like uncertain.
I think like, just like manylike trade related or macro
underrated uncertainty is likehappening in 2018.
You're talking about like firstbatch of tariffs, you're
talking about export control onchips, and so you still have
(10:49):
like a lot of market volatility.
What can happen to that is,they're going to hurt valuation,
right, they're going to hurtmultiples.
Unfortunately, just like the USmarket, as you said, like the
Q's and S&P 500, they have amuch higher valuation because
the strong growth.
So there's like a better aspect, like higher expectation on the
(11:10):
market, so that what the highervaluation become like a victim
right, because now with theuncertainty, the violations come
down a little bit.
Um, but china, on the other side, have a much lower valuation,
is already very cheap or lowervaluation, so the safety margin
is higher.
Like you cannot go much higherfrom this level given the
(11:34):
current cheap valuation.
So that's why, like you see,there's a kind of like the
impact for China technologyspace is less compared to the
global technology.
Another point I want to mentionis, like technology generally
is a growth investment.
But also look at the nature ofthe tariff is impacting trade,
right, like it's impacting trade, impacting more like retailers,
(11:58):
like manufacturers, but mosttechnology companies in China,
especially, is really focused ondomestic consumption, right,
it's like domestic revenue,people doing online shopping,
people doing like mobile payment, mobile gaming, so those
activities not much impact ontariff.
So I would think that, to thatpoint, people think fundamental
(12:20):
may be less impactful forespecially China internet names.
So just I think, like justoverall long term technologies,
the fundamentals for both US andChina technologies still very
solid, but like just theheadlines or the uncertainties,
macro risk is going to reallybring down the valuations for
both US and China, down thevaluations for both US and China
(12:42):
.
Speaker 1 (12:43):
So with the domestic consumption point for a bit,
because I think there is asilver lining to all this tariff
talk, which is it does bringinto light the point that all
these other countries can't justassume the US will be their
consumer forever, or at least atthe magnitude that has been the
case for a number of years.
One of the areas I've heardabout why China has performed a
(13:05):
lot better right relative to theUS in this facility is because
of the belief that there's goingto be some stimulus bazooka
right to try to really get thedomestic side to ramp up as
tariffs start to, you know, chipaway at some of the revenue
potential of China's exporters.
What are your thoughts on that?
(13:25):
I mean, should we, should westart thinking about it and
looking for some real targetedfiscal spend?
Speaker 2 (13:32):
I would think like first, I think people should
have noticed the background ofeconomic cycle is very different
between US and China.
So, starting from COVID, right,like there's a lot of stimulus,
like trillions of stimuluspackages from the US government
to really expand the fiscal,like spend a lot of money from
the government side and you havea low interest rate, like the
(13:54):
monetary policy stimulus fromthe US side.
So that stimulus cyclehappening in the US during the
COVID, boosting the equitymarket and all the assets in the
US.
However, in China, startingfrom, I think, 2014 or before
that, what China has done isreally deleveraged.
(14:15):
They have been really pullingthe credit from the real estate
market and creating thisdeleverage on this like called
systematic risk.
So you have kind of like aman-made, kind of like people
that just like bust a bubble onthe real estate, like, oh, the
real estate price was down like20%, like 30%.
(14:36):
That happened during COVID isthe worst time, right, you have
a COVID impact.
You have the real estate impact.
So the economy is really intolike a mini recession.
Right, you have a COVID impact.
You have the real estate impact.
So the economy is really intolike a mini recession, right,
think about how people feel andyou don't have much fiscal
stimulus like what happened inthe US, in Europe, in China,
(14:58):
because government peoplethought, oh, maybe after COVID
government started to begin tostimulus, we have that hype
September last year, right, likepeople think, oh, china could
do like trillions and trillionsof dollars like what happened in
the US, to really bring theeconomy back to the growth, but
it didn't happen.
Right, it's way less thanpeople expected.
(15:20):
So the argument back then is,like China's holding that
because they see this tariff'sgoing to come in.
So what they're going to do isreally they're going to estimate
the impact from the tariff sothey can really size the
stimulus package right.
They can really determine howmuch they need with the print
(15:43):
money or spend from thegovernment to really offset the
impact from tariff.
I think that's really rational.
So think about, like any policymaker, right, you think about
like this uncertainty from thetariff, how much they're going
to damage the export sector ofchina, like those small
factories in the south.
Then you really need to helplike very laser focus on those,
(16:04):
but as well as like the totalspending package from the
government.
So it makes more sense to forthem to do that.
Yeah.
Speaker 1 (16:10):
When I hear you say that, my mind goes to how do you
even estimate the real effectsof these tariffs if there's no
clear clarity as far as whetherTrump whipsaws the world or not?
Right, I mean, for all we know,tomorrow he could totally
change his mind and say you know, we're going to change up these
formulas or we're not going tohave as many tariffs as can be
on specific things.
How does any country properlyplan a stimulus package around
(16:32):
domestic consumption if there'sno real clarity on the policies
of the US?
Speaker 2 (16:38):
I think that's the problem.
It's a problem for everycountry and a problem for well,
you're definitely going to havelike a negotiation along the way
right, like what's the size andwhat's that?
I think, like just on the Chinaside, they're going to just
size the.
They have probably have like aplan A, plan B, plan C and,
(17:00):
based on like the realnegotiation result, they're
going to carry out those plans.
So that's kind of like morerational plans.
So far we don't hear what'skind of like the real
negotiation is happening rightnow.
But we have seen Trump isreally using oh, how about a
TikTok deal?
How about that deal likeFanatol, everything that's part
(17:23):
part of the on the table.
On the table like you're goingto have, you're going to have
eventually some negotiation.
Then China's China governmentside knows what the size of the
impact going to be.
So they're going to determinethat plan right.
So I would think that's morelike the past going forward for
China to really do stimulus.
But I think another factor is,after the years of kind of a
(17:47):
deliverance on the real estateside, things start to stabilize
in China and also all thoseinvestments into the technology
side, especially internetcompanies, there's growth
actually start to pick up comingout of the recession right,
coming out of this, those likedeleverage.
So I think China's governmentalso want to see how that's
(18:09):
going, because, of course, realestate is a big part it's
probably like 30 or one-third ofthe economy but when growth
started picking up, maybeChina's kind of.
Really we don't need such a bigstimulus to really help the
economy to grow again, right?
So so far, I think a lot ofanalysts already revisioned
(18:31):
their earning growth estimatedfor China internet name.
So that's kind of like apositive sign on the fundamental
side because of what happened,like this deep seek and AI and a
lot of the technologyinvestment.
Speaker 1 (18:42):
And talk to me about what's going on on the ground as
far as AI implementation.
I think in the US, thecriticism which is one that I
have, at least is that there isall this hype around AI and
productivity benefits, but itdoesn't seem like there's that
many companies actually reapingthe rewards of that.
Is it different in China?
I mean, are we seeing on theground in China far more AI
(19:04):
integration, far more of a linkbetween AI profit margins of
various companies?
Speaker 2 (19:10):
Well, we actually have a partner on the artificial
intelligence space in the WestCoast.
So they're kind of like AInative investors, engineers like
, who used to work like in openAI or working, and they're
autonomous driving companies.
So we have a constant like a uha dialogue with them, like on
just what happened in the U?
(19:31):
S and AI, what happened in inChina.
They have some analysts inChina as well.
So the thing we see, whathappened in AI application, is
really beyond the surface, right.
So, because what people areusing like AI is like real chat
to BT like or image generation,but that's only like fractional
of the use case for AI.
(19:52):
What's really happened like Ithink it's meaningful is really
on the enterprise level.
So there's a lot of enterprisesbeginning to like adopt AI
level.
So there's a lot of enterprisesbeginning to adopt AI.
We're talking about justtraditional inventory management
, enterprise solutions,predicting your sales and doing
logistic planning.
Those are things we call theERP or traditional use like
(20:17):
digital twin to create a digitalsystem for your company.
But now your AI can reallyadding like intelligence to that
digital twin, right you, youcan really creating a data logic
and like action intelligence toreally automate a lot of things
.
So efficiency can be massivelyimproved for a lot of retailers,
(20:40):
manufacturing and forhealthcare side, that's a lot of
AI development on the new drugdiscovery.
On the insurance, financialside, talking about policy
underwriting is really cuttingtime from two weeks to 30
minutes Things like that justcreating trillions of value.
(21:00):
I think One of the biggestthings I think we've been
talking about is really coding,because the current AI
capability in coding, theperformance is really
unbelievable.
The way the AI can code is like80% of human right, so that's
going to create a lot of likeproductivity gain for the
(21:23):
technology company.
But also it's going to do a lotof things.
I think that's kind of likeit's the early stage of AI
adoption for, like consumer sidenow, right, when, just like
similar to many technologybreakthrough in the history,
like internet technology,breakthrough in the history like
(21:45):
internet, like PC internet,mobile technology in cloud
usually started with enterpriseand then migrated to consumer
when technology becomemainstream, right.
So we are on that edge like alot of enterprises using now.
I think consumer application isgoing to come soon, especially
with the AI agent.
I think a lot of people aredoing that application.
It is similar in China.
(22:06):
There's a lot of AI agent appthat's really under development.
That's really, I think,consumers going to feel the
change, right, going to feel thedifference, because a lot of AI
agents that come like yourpersonal assistant, they can do
a lot of things for you link toyour data, link to your app, and
then they can automate a lot ofdecisions.
(22:27):
If you think about, like, book atravel if you go to anywhere,
like they can book the hotel,book the flight plan, the travel
, like logistic for you, or ifyou think about doing anything
like organizing your email, likeyou see, I don't know about you
, me, I receive like hundreds ofemails a day.
Or how do I prioritize, like,do analysis or auto reply those
(22:48):
emails.
I think there'll be agentavailable to do all this work.
How much you would be willingto pay that right?
Those are a lot of money, like,I think, consumers, enterprises
willing to pay for thosesolutions and eventually they're
going to be returned oninvestment to those AI companies
.
Speaker 1 (23:04):
Let's talk about, on the Craneshares side, agix.
I'm going to share my screen aswe're talking here.
A lot of attention around AIETFs in the US.
Let's talk about theCraneshares product.
Speaker 2 (23:22):
Well, agx is very different from many other AI ETF
, which is like just traditionalindex provider, created based
on either keyword, searchingsectors, right, like, just like,
not a way to play technology.
Agx is really leveraged on theexpertise of the venture
capitalists and the AI nativeinvestors and engineers.
(23:44):
So, like, the partner we haveis really coming from OpenAI and
all those large-scale modelcompanies, so they know which
company are really behind thiswave of Gen AI and large-scale
model, right.
So there's an ecosystem, likewhat I said, application side,
(24:05):
where it's really providingservice for enterprises and
consumers really to bring thatGen AI to real-life applications
.
Then you need infrastructureside, providing the cloud,
providing cybersecurity,providing data storage, and you
need the chips and all thosematerials to make those
infrastructure.
So this is a more comprehensiveand a holistic approach to
(24:31):
really investing in the Gen AIand large-factor model companies
and really capture or diversifylike a basket right, think
about it.
Most people investing in AIjust Mac 7, right, but that's
overly.
Most people investing in AI arejust max seven right, but
that's overly concentrated.
Like, if you just buy severalmax seven stocks as your AI play
, you are likely to get moreconcentration risk compared to
(24:54):
our 40 plus basket approach islikely to offer more
comprehensive or capture broaderopportunity from from AI in
each layer of the ecosystem.
And, more importantly, when welook at AI investment and
benchmarking, there's a criticalpart I think is missing in a
(25:14):
lot of AI ETFs is the unicornsthat are still private and is
the large-scaleash-modelcompanies.
So that's why we made our firstinvestment into a private AI
company called Anthropic.
I'm not sure if you've heard ofAnthropic.
It's the AI company behind theCloud AI Cloud.
(25:37):
They just published theirlatest Cloud 3.7 model.
It's one of the top performingAI large-tank model in terms of
coding.
They have a very large sharegain from OpenAI in terms of
enterprise adoption.
So a large-tank model companylike that is missing in a lot of
AI companies when you'retalking about this round of the
(26:00):
AI opportunities really builtaround the Gen AI and a
large-tank model.
But you don't have that in yourportfolio.
So adding that private companyinto an ETF is kind of like
innovation in the industry.
But we think that approach,like many institutional
investors in the element theyhave like a 5% to 15% investment
(26:20):
into VC, I think, just asindividual investors or
financial advisors adding aprivate company into an ETF is
like an institutional investorapproach towards the long-term
growth potential from artificialintelligence right.
Speaker 1 (26:37):
Yeah, and I certainly I'm a fan of the weightings
here relative to what you see ina lot of the other.
To your point, max seven highconcentration type of products
how do tariffs longer term ormaybe even short term impact the
AI trade?
I mean, clearly, when it comesto the US, to the extent that AI
, or rather tariffs, causevolatility.
(26:59):
The knee-jerk reaction to sellpassive indices means all the
top names, just AI or not, aregoing to get slammed.
So there's a degree of justsort of the passive pressure on
that end.
But is there anythingfundamentally that changes with
tariffs and some of thesecompanies on the AI side?
Speaker 2 (27:19):
We don't see much like fundamental damage on the
AI side because a lot oftechnology is really like you
know, like just what I'vedescribed on those solutions, on
those really new revenuegeneration right, those really
infrastructure building, thoseare really technology
breakthrough innovation thathappened previously decade right
.
Like think about the internet,the mobile technology, the cloud
(27:43):
.
That's like a decade longinvestment opportunity and we
are still at the early stage ofthat.
So I think for any peopleinvesting AI is really you have
to think about your investmenthorizon.
If you just like what happenedin previously like there's many
volatile and short-termvolatility happening on many
(28:06):
other internet era or cloud erathere's great company compounded
return over the long term right, have a very meaningful
short-term volatility.
So how do you really thinkabout that?
Right, I think it's not up forevery investor because you're
going to have those moments likewhat happened with tariff.
You're going to have thosemoments like what happened with
tariff.
You're going to have ameaningful short-term volatility
(28:26):
, but you're going to have a.
If you look at a much longerhorizon, you have to position
your portfolio where the growthsare right.
So artificial intelligence inthe long term is going to have a
meaningful compounded growth,because all the AI term is going
to have a meaningful likecompounded growth, because all
the AI innovation is going tohappen.
It's going to disrupt the wholebusiness and create a much
(28:49):
higher revenue for a lot ofcompanies going forward.
But in the short term, thatheadline risk or the trade
related tariff, that's going tohurt the multipleations and
sentiment, right.
So that's like, how do youreally justify that?
Right, I think, just bestrategic and be disciplined,
(29:10):
right?
So when you have an allocationto a long-term market, I think
artificial intelligence is agreat fit for a long-term
investment.
And I mean, like, since I'm nowdiscount right now, so
valuation is much cheaper, sofor any long-term investors,
it's actually a greatopportunity for them to buy
those assets at a discount,right?
Speaker 1 (29:31):
what is the, what's the state of sort of
consolidation when it comes toAI names, whether it's US
specific or China specific?
I mean, I don't know what goeson on the ground in China, but,
you know, are there AI companiesthat are merging and taking
over other AI technologies.
I mean, what's going on there?
Speaker 2 (29:52):
there's a lot of private like there's a lot of
private companies, I thinkpartner with the public
companies.
So basically, leverage theprivate side of the technology
breakthrough is gonna help a lotof like public companies Just
for now.
But, like I think, at Alibabathey invested a lot of like
private AI unicorns and now theycome up with their own large
(30:12):
connection model which is top onthe performance.
So I think with thatconsolidation, a lot of like
private companies they're kindof like become there's a lot of
like private companies.
They're kind of like becomethere's a lot of like startups
that are going to become likemore relier, rely on the
resources from the largecompanies right Given the market
(30:33):
volatility.
So that's kind of like a thingthat like.
China internet companies can domore with the private side to
really bring on those technologyto their use cases.
Speaker 1 (30:44):
I feel like we should talk about currency movement in
all this, especially the waythat the dollar has been
behaving relative to yields.
By the way, it used to be thecase, for example in the US,
that a strong dollar would meanyields would drop.
The last several years, it'sbeen the exact opposite, and now
the dollar is weakening againsta broad basket and yields are
(31:04):
dropping.
How does currency movementimpact the AI trade, if at all,
and, and In general with tariffs?
Can China just respond bymanipulating their own currency
further?
Speaker 2 (31:23):
Well, I think, just like you think about the goal of
Trump administration really tohow can the US really rebalance
this trade deficit.
I think the only way is reallyto depreciate the dollar right,
like have a weak dollar.
I think the only way is reallyto depreciate dollar right, like
have a weak dollar.
Think about the mechanism ofwhy there's a lot of trade
(31:43):
supplies is because strongdollar and dollar as a global
currency like when China sold alot of goods to US they keep
dollar as reserve currency andbuying more treasuries right, us
treasuries so then dollar canbecome stronger.
So that game has been going onfor a while.
(32:05):
Right, when you have a strongdollar, then trade deficit.
So I don't think, like, unlessyou have a meaningful
depreciation on the dollar, thattrade balance, trade imbalance
is unlikely to be adjusted.
So think about that.
What can happen is, I wouldthink, china likely to.
(32:28):
Really they have a huge currencyreserve in dollar, so they can
use a lot of those currencyreserve to really manage the
risk from the US side, like, ifthe US dollar is going to
depreciate, rmb is going todepreciate.
That's probably going to be partof the negotiation between US
(32:48):
and China.
So on the currency side.
But generally on the technologynames, I don't think that's
kind of like a meaningful impacton a lot of either US tech or
China tech, because currencyimpact is less meaningful when
it comes to the earnings growthand revenue growth for those
tech tech and tech names,because for US tech and tech
(33:12):
names most revenue is still fromdomestic and for China is the
same.
So I don't think that's like ameaningful impact on the
business side.
But generally like a weakeningdollar means there's like global
investors are going to their USinvestment going to depreciate,
right.
So that means likely the morediversify away from the US asset
(33:36):
.
So we have been seeing that,like in Europe, right, some like
China.
So I think if dollar continueto depreciate, that asset flow
is going to continue for a while.
Speaker 1 (33:48):
Talk to me a little bit, just high level, about
Craneshare itself.
I mean, you guys are realthought leaders when it comes to
a lot of different parts of themarketplace, but obviously you
know focus on the China sidequite a bit.
Talk to me about the depth ofexperience, expertise, how your
thoughts and research may be ormay not, may not go into the
(34:09):
construction of the funds.
Any kind of context like that Ithink would be helpful.
Speaker 2 (34:13):
Yeah, so I think we have we're like laser focused on
a lot of our research topics,especially on the technology
side, on the China side, and ona lot of our pillars of strategy
.
We have a dedicated researchteam on each pillar of our
business and we work with a lotof third parties as well.
(34:33):
Like I said, we have a venturecapitalist partner.
We partner with many otherparties in the industry to
really leverage their expertiseas well.
So it's a very comprehensiveapproach and we have teamwork.
We have monthly meetings andreally discuss a lot of our
strategic planning for theproduct, for our positioning,
(34:55):
our solutions when it comes toproduct development, for our
positioning, our solutions whenit comes to product development.
Like we think we really have tobe thoughtful on portfolio
construction, like just strike,a very well-designed index,
because a lot of our ETF isactually tracking the index.
So we have to really thinkabout, like the portfolio
(35:15):
construction, how to really bestposition ourselves in terms of
the index investment.
So that's kind of like ourapproach as a like a crunchers,
like a star leader on China,climate alternatives and
technology space.
We have been really using thatapproach to really doing
(35:36):
research and really building ourresearch into our index
products.
Speaker 1 (35:41):
Does a day like this excite the team at Craneshares
when you get this kind ofvolatility?
You know I always go back tobecause I deal with a lot of
fund issuers.
I think fund issuers like whenthe S&P goes down hard because
to some extent everyone'scompeting against that Home bias
, availability heuristic as faras the definition of in quotes,
the market.
If you're going to try to grabflows, you want to see
(36:04):
volatility.
Do you see, like, do these kindof periods get everybody even
more invigorated?
Speaker 2 (36:11):
I think it's kind of like for crane shares.
We do have a lot of well Chinasolutions and alternative
solutions for especially like amarket moment like that for risk
management.
So from a business perspective,it's definitely like a kind of
like validation for our productsolutions that you really need
(36:32):
to diversify your allocationoutside of just 100% US and you
really need to really manageyour risk, like what happened to
like institutional investors.
They have really a decentallocation to alternatives.
So from Cranesha's productsolutions, we think this is kind
of like market.
We have been really thinkingabout and offering the right
(36:55):
solution for our investors toreally create a diversified
portfolio.
Right, so, um, but like that'skind of like not common in an
industry.
I feel like most people justthink about this only.
Like sp500 is the only onlything I look at, right, that's
happened to many investors aswell.
Uh, for many, many years.
(37:16):
So common, right, like when youhave that mentality for like
every quarter, right Fourquarters a year, then that
mentality become like a fixedmindset.
So diversification is not athing like people like to
struggle, right, but like Ithink now it is very different.
(37:38):
Like when you have like microuncertainty, when you have what
do you say like currency risk ona lot of US currencies, so
that's kind of like a moment fordiversification.
So I think our business,especially our China side and
alternative side, is reallycreating that solution for
(37:59):
diversification for investors.
Speaker 1 (38:01):
Let's talk about the types of investors that go into
some of your funds.
You mentioned alternatives, youmentioned the climate and then,
obviously, we talked about AIand China here, focusing on
China and the intersection ofChina with AI, is it one of
those things where you typicallysee, for example, financial
advisors, you know, do a verysmall allocation to this part of
(38:24):
the investable landscape, youknow, somewhere in the 2-3%
range or do you see that somepeople actually take much more
aggressive bets?
Because, let's face it, thebiggest criticism around
investing in China is that it's,in quotes, uninvestable, right,
and I always go back to it'suninvestable until it's trending
up into the right and thensuddenly it's investable.
Speaker 2 (38:44):
Exactly, I think, like our business has been
involved in terms like clientbase, I think, starting the
business.
Most of our investors arereally financial advisors and
retail investors.
That's like 10 years ago,financial advisors and retail
investors that's like 10 yearsago.
But as the business involved,more and more institutional
investors are using our ETFs forChina allocation.
(39:05):
That happened especially around, I think, like it's really
using K-Web.
When K-Web's really become kindof like most liquid and very
sophisticated tool for a decentChina allocation and that's when
China's allocation become likea meaningful part of the
(39:26):
institutional investor in the USas well.
But since the start of changeI've been going like when I back
in 2018, when Trump firstturned and threw in China trade
war, I think that created a lotof uncertainty on China
investment, so our clients from,especially, financial advisor
side decreased dramatically.
(39:46):
So a lot of advisors divest toChina.
But the institutional use ofour ETF is actually increasing.
We see more and moreinstitutions using institutional
investors, especially a lot ofbig pensions, big hedge funds
even, are using K-Web as anallocation or tactical
(40:08):
investment tool.
So that trend has really, Ithink, has been going for the
past five years, but until now,I think, with the
diversification in mind.
I think the more and moreconversations around like, oh,
how can really using China fordiversification when China's at
(40:28):
such a low valuation?
And there's actually upsidewith the deep secret with the AI
adoption in the China internetnames, I think that's a
conversation that's picking up.
But, as you like, we all knowthis has been a mindset for many
, many years, so a change ofthat mindset can take longer
(40:48):
than people expected.
But I think the institutionalinvestors are happy to adopt and
change.
Then I think more and moreother type of investors are
going to follow that.
Yeah, so that's for our Chinaside, then for, I think, the
alternative side I think that'smore institutionalized of the
(41:09):
financial advisors.
I think there's a lot ofindependent advisors.
Their sides become moremanifold, so their way to
allocate is becoming more likeinstitutional investors where
alternatives, and especiallylike managed futures or hash
equity, become a bigger part ofportfolio to really creating a
true diversification for, likewhat happened, a growing
(41:32):
allocation from those advisors.
For the carbon side, it'sinteresting because it's purely
institutional.
Most investors in our carbonsolutions are institutions and
it doesn't really resonate wellon the advisor side.
(41:54):
But things are changing.
I think more and more advisorsare learning about the carbon
space and adding allocation tothe carbon.
So it's a very interesting mixof the three pillars of our
business and I haven't mentionedabout our technology.
The AGIX so far is mostlyfinancial advisors and retail
(42:16):
investors.
Given the size and the kind oflike we just launched it last
year, so you haven't becomeavailable for a lot of
institutional investors.
But we got most of the feedbackon the AGIX because our
investment into Anthropic Ithink a lot of people starting
(42:36):
to notice that as a uniquesolution in the industry,
because there's no such solutionto adding a private AI unicorn
into an ETF like that.
So that's the picking up amonginvestors who want to get access
to that part of the investment.
Speaker 1 (42:56):
What do you think most people get most wrong about
investing in China?
I know it's a broad statement,but there's always
misconceptions, right?
So, from the kinds of peoplethat you talk to, the kinds of
things that you see, what do youthink is the thing that most
get wrong?
Speaker 2 (43:12):
I think a lot of people just thought, like, when
there's a cycle anywhere,there's a cycle in China.
So a lot of people think Chinais all in West Boat because of
politics, because ofgeopolitical, but end of day is
economic cycle.
So we have seen that cycle isdown.
Now the cycle is picking up.
The violation is down, nowviolations should pick up.
(43:34):
So just every country, there'snormal normalization, there's
main convergence, um.
So that happened in the us,that happened in china, um.
So we think, like always, likepeople usually just focused on
media, focused on macro, focusedon geopolitical event, but like
(43:54):
, end of the day, it's aboutearnings, it's about like
earning growth, it's aboutearnings, it's about like
earning growth, it's aboutmultiples.
So I mean like I think that'skind of like first thing people
get around because, end of theday, china's investment.
Those are companies that justlike listed by well, like just
managed by, like entrepreneurslike you and me.
So basically, that's a business.
(44:16):
You have to evaluate thebusiness investment like many
other business in the world.
Second thing I would think isthe misconception in the
innovation in China.
A lot of people think like Chinais kind of like industrial
right, like we're manufacturingduring the economy, like
(44:37):
industrial right, like we'remanufacturing during economy.
But when you look at like thedemographic in China, people
always talking about agingpopulation but people didn't
notice there's a generationevolution, I would say, because
the younger generation and theprevious generations are totally
different.
Generation, I would think,because think about like the
(45:00):
people about 40s in China, theirwhole background when they grew
up is kind of like when Chinahas not much education, there's
not much industrial, there's notmuch international access.
But the younger generation ismuch behavior, like a Western
mindset, with tons of access tointernet, to innovation,
(45:21):
education.
We're educated a lot of likecollege degree, graduate, uh,
engineering degree and they'vebeen like very uh focused on
innovation and um creating likenew business models.
So that generation shift isgradually happening because
those younger generation becomecome like the main labor force
(45:44):
and the business owners wereChinese companies and that's
going to create a dramatic shiftin the economy because people
are different, people's mindsare different, people's ability
is scope, their way of doingthings that are totally
different now.
So that makes China aninteresting place where you have
a different group of people.
(46:05):
Becoming the mainstream isgoing to create, I think, like
tons of innovation andinvestment opportunity for the
global investors.
Speaker 1 (46:15):
There for those who want to track more of
CraneShares' research and learnmore about your funds in general
.
Where would you point them toand then maybe provide some
final thoughts for those thatjust want some calmness after
such a crazy day?
Speaker 2 (46:29):
Oh well, like anyone who want to follow our research
can go to cranesharescom for theAGIX fund.
Like you can go tocranesharescom slash AGIX fund.
Like you can go to crinciouscomslash AGIX.
And, as I said, like I think,just when you have like this
moment, like today, I meanpeople feel pain, right, feel
(46:50):
like fearful.
You know it's like our brain islike animal, right, when you
see the market going down, youjust feel that like painful and
you're gonna escape, right.
But I think, like there's manymoment like this in history
before and after a while, after,after all the headlines, after
(47:10):
all this macro uncertainty, um,in the long term, it's the
weighing machine on the earnings, right, so the earnings is
still good, um, I mean, likethose businesses still doing
great, like they're beinginnovated, they've been
developing new products, they'rebeing, uh, generating new
revenues and creating a solutionthat's really meaningful for, I
(47:31):
think, human beings and you andme.
Um, so those are great businessto own in the long term, right?
So the short term is creatingvolatility but also a buying
opportunity, because those aregreat business to own in the
long term, right, so the shortterm is creating volatility but
also a buying opportunity,because those are now think
about like a business is atdiscount, so you should buy the
business at discount.
So if you think about a way, ifyou think of a way of investing
(47:53):
like that, you'll feel morecomfortable about the market
today, right?
Speaker 1 (48:00):
Very well said, appreciate those that watched
this live stream.
This will be an edited,webinar-sized podcast available
on LeadLag Live on all yourfavorite platforms.
Again, this is sponsored byCraneshares.
Hopefully you'll do this againwith Derek, maybe on a more calm
day, although, who knows, Idon't mind.
Being in an age of turbulence,I think that's where the real
(48:22):
interesting strategies start tostand out.
So thank you Derek, thank youbuddy, I'll see you next time.
Speaker 2 (48:27):
Thank you, Michael Cheers, everybody.
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