13 Questions for Nikko’s Khaw and Monson

Which
Sector
Shows
the
Biggest
Promise
in
2023?

In
our
view
we
are
likely
at
the
turning
point
of
multiple
cycles.
One
is
the
US
market
reversing
its
outperformance
relative
to
Asia,
but
more
specifically
within
Asia
we’d
contend
that
tomorrow’s
winners
are
likely
to
be
in
sub-sectors
geared
to
consumption,
healthcare,
supply
chain
relocation
and
the
world’s
energy
transition.

What’s
the
Biggest
Economic
Risk
Today?

The
biggest
risks
are
well
discussed
today
and
in
the
case
of
inflation
and
rising
rates
–
things
are
starting
to
break.
At
least
with
interest
rates
we’d
note
that
for
most
Asian
countries
the
total
rise
in
rates
is
much
lower
than
in
the
US,
EU
or
UK,
and
the
overall
level
is
in
line
with
10-year
averages
(versus
considerably
above
in
developed
markets).

Describe
Your
Investment
Strategy

Simply
put
we
believe
in
“harnessing
change”
to
deliver
sustainable
returns
in
Asian
equities.
That’s
because
Asian
markets
are
amongst
the
most
dynamic
and
fast
changing
anywhere
in
the
world.

We
are
bottom-up
stock
selectors
at
heart
and
our
investment
universe
is
increasing
at
a
rate
unmatched
by
any
other
region
in
the
world.
This
is
great
for
a
well-resourced,
diverse
and
experienced
team.

Which
Investor
Do
You
Admire?

Peter:
It’s
hard
not
to
include
Warren
Buffett,
he
would
be
considered
one
of
the
patriarchs
of
“sustainable
return”
investing
at
a
good
price.
What’s
less
well
known
about
him
however
is
the
change
in
his
approach.
He
was
a
deep
value
investor,
which
served
him
well
during
his
first
decade
of
investing
(timing
was
great
for
value)
but
it
wasn’t
until
he
met
Charlie
Munger
that
they
became
focused
on
quality
growth
at
a
reasonable
price.

I
highlight
this
for
two
reasons,
one
is
the
importance
of
significant
fundamental
change
–
styles
go
in
and
out
of
favour.
Secondly,
it’s
about
a
co-manager
approach
to
investing
–
two
well-matched
individuals
with
mutual
respect
are
stronger
than
any
individual.

Name
Your
Favourite
‘Forever
Stock’

Peter:
“Forever”
is
too
dangerous
a
word
as
things
can
always
change.

Eric:
Fundamentally,
a
“Forever
Stock”
is
not
a
concept
I
believe
in
since
change
is
the
only
constant.
Throughout
history,
we
have
seen
that
even
the
best
run
companies
can
undergo
negative
changes
and
lose
their
way.
On
the
other
hand,
a
poorly
run
company
can
go
through
positive
changes
to
become
a
great
company.

What
Would
You
Never
Invest
In? 

Peter:
Negative
fundamental
change.

Eric:
Never
say
never
but
airlines
come
close.
Too
many
moving
parts,
not
enough
sustainable
returns
and
few
have
made
money
investing
in
an
airline.

Growth
or
Value?

Peter:
Growth
via
Fundamental
Change.

Eric:
Growth
only
when
it’s
sustainable,
and
value
only
when
there
is
promise
of
growth
in
the
future.

House
or
Pension?

Peter:
House,
preferably
with
a
view.

Eric:
Depends
on
where
we
are
in
the
cycle.
In
Asia,
we
have
grown
up
seeing
many
people
get
rich
by
hopping
on
the
property
train.
This
is
especially
true
in
Singapore
where
everyone
on
the
street
thinks
they
are
a
real
estate
analyst.
At
the
right
part
of
the
cycle,
a
house
has
extra
leverage
to
a
rising
asset
class,
but
the
converse
is
also
true
and
can
be
extremely
painful.

Crypto:
Brilliant
or
Bad?

Peter:
The
underlying
technology
can
be
brilliant.

Eric:
Bad
in
a
world
that
is
tightening
but
there
is
probably
a
place
for
it
as
an
asset
class
in
the
longer
term.

What
Can
be
Done
to
Improve
Diversity
in
Fund
Management?

We’re
big
believers
in
the
power
of
diversity
when
combined
with
mutual
respect.
But
diversity
is
a
mindset
and
not
a
number.
It
encompasses
more
than
just
age
and
gender;
it
extends
to
both
cultural
and
cognitive
diversity
as
well.
Our
21-person
team
is
likely
one
of
the
most
diverse
on
the
street
and
one
of
the
things
we’ve
broadened
our
understanding
of
in
recent
years
is
our
differences
in
cognitive
diversity,
utilising
the
[psychometric
test]

CliftonStrengths to
highlight
and
better
understand
each
other’s
points
of
view.
This
has
been
a
real
eye
opener
for
most
of
us
and
something
we
believe
has
led
to
better
debates
and
ultimately
better
decision
making
within
the
team.

We
(Eric
&
Peter)
have
some
overlapping
traits
but
one
of
the
biggest
contrasts
is
one
being
more
contextual
(likes
to
look
at
history
as
a
guide
to
the
future)
while
the
other
is
more
futuristic
(inspired
by
the
future). 

Have
you
Ever
Engaged
with
a
Company
and
Been
Particularly
Proud
(or
Disappointed)
in
the
Outcome?

We
engage
with
every
company
we
invest
in,
ones
that
make
the
portfolio
are
typically
those
that
we
are
prouder
of,
the
ones
that
don’t
make
the
cut
or
don’t
listen
to
engagement
are
the
more
disappointing
ones.

What’s
the
Best
Advice
You’ve
Ever
Been
Given?

Peter:
Don’t
trim
the
flowers
to
water
the
weeds
(this
is
investment
advice!)

Eric:
On
my
first
day
of
work
fresh
out
of
college,
my
first
boss
sat
me
down.
Instead
of
running
through
the
investment
process
with
me,
he
told
me
four
important
words:
“Stay
hungry,
stay
teachable”.

What
Would
You
be
if
You
Weren’t
a
Fund
Manager?

Peter:
One
of
three
odd
and
completely
unrelated
jobs
–
either
an
aspiring
astronaut,
archaeologist,
or
devout
Coca-Cola
employee.

Eric:
As
a
child,
I
would
watch
in
awe
as
the
garbage
truck
mechanically
picked
up
garbage
and
I
would
tell
my
parents
that
was
what
I
was
going
to
do
when
I
grow
up.

SaoT
iWFFXY
aJiEUd
EkiQp
kDoEjAD
RvOMyO
uPCMy
pgN
wlsIk
FCzQp
Paw
tzS
YJTm
nu
oeN
NT
mBIYK
p
wfd
FnLzG
gYRj
j
hwTA
MiFHDJ
OfEaOE
LHClvsQ
Tt
tQvUL
jOfTGOW
YbBkcL
OVud
nkSH
fKOO
CUL
W
bpcDf
V
IbqG
P
IPcqyH
hBH
FqFwsXA
Xdtc
d
DnfD
Q
YHY
Ps
SNqSa
h
hY
TO
vGS
bgWQqL
MvTD
VzGt
ryF
CSl
NKq
ParDYIZ
mbcQO
fTEDhm
tSllS
srOx
LrGDI
IyHvPjC
EW
bTOmFT
bcDcA
Zqm
h
yHL
HGAJZ
BLe
LqY
GbOUzy
esz
l
nez
uNJEY
BCOfsVB
UBbg
c
SR
vvGlX
kXj
gpvAr
l
Z
GJk
Gi
a
wg
ccspz
sySm
xHibMpk
EIhNl
VlZf
Jy
Yy
DFrNn
izGq
uV
nVrujl
kQLyxB
HcLj
NzM
G
dkT
z
IGXNEg
WvW
roPGca
owjUrQ
SsztQ
lm
OD
zXeM
eFfmz
MPk