Invesco has developed a playbook for dealing with pandemics for its global offices. Given your position, how has the rollout of the responses differed across Asia – and indeed around the world? Which regions have led the way and why?
To me, the asset management business has always been defined by two things. First, we are a fiduciary business. Clients trust us with their assets to manage on their behalf and because of the them, fiduciary responsibility means that we have to ensure that we have a client-centric mindset and are able to conduct our business without being impacted, whatever the situation may be.
Secondly, we are not a manufacturing company, we are a people business – that is how I think, whether I’m managing either a single location or a region. We can’t do what we do without having the talent that we have, so the people aspect is critical. When you think about how we manage our business over different cycles and shocks, the playbook we have for the business in general really has to take that client-centric mindset, as well as our key stakeholders, people, staff, colleagues, and put them first. If we don’t take care of our own people, there is no way we can continue to fulfil our fiduciary responsibilities. First and foremost is the wellbeing of our staff. If they are safe, healthy and have the right way to access the system and technology to continue to do their business, then we as a firm will be able to fulfil our responsibility to our clients: managing assets, preserving assets, finding opportunities.
Hong Kong is our Asia headquarters, but not our largest office. Hyderabad has 1,000 people, whereas Hong Kong has 300. Rolling things out for an office like Hong Kong is not easy, whereas smaller offices such as in Taiwan or Singapore are easier because there are fewer people. But to do the same thing for 1,000 people, or in the US and Europe and across these different markets, is quite a different story. We have to take into consideration some of the cultural differences, not necessarily in terms of creating our playbook, but in terms of rolling out the different aspects of our playbook across regions. We started with Asia but as we do this more widely and consistently across the group, there are local nuances that we would have to consider to ensure that the playbook makes sense for colleagues in different parts of the world. The playbook is one thing, but being able to stay nimble on the rollout to address the challenges is also critical.
We are starting to see a tech-driven bifurcation between the US and China underlined by geopolitical tensions. What impact will this have on Chinese telco companies in their ambitions to roll out their product equipment to other parts of the world? To what extent can this pain be absorbed by China’s domestic market and for how long?
This is a multi-trillion-dollar question that we’d all love the answer to! When we see the rhetoric – the “trade war” has clearly spilled over to technology. Whether this is necessarily economics-related or more politically charged in terms of the conversations is another question, but we have been living in a world where global collaboration and enacting global trade is a given.
When it comes to Chinese firms utilising the digital and technology footprint that has been developed and taking that to the next level – rolling out office equipment and so on to enable a better user experience – if they continue to do that, clearly the risk is that if your supply chain is cut off, then your assumed business model is gone.
In terms of the decoupling aspect, non-dependency between the US and China – whether it’s a Chinese technology firm relying on US manufacturing technology, or foreign buyers of Chinese technology, or banning usage of Huawei or whomever on certain technologies – is where we’re seeing that this is a survival issue for some companies and if we have no assets to pair, we’re all dead. Some of these firms are dependent on that – their survival is dependent on the continued accessibility of those foreign-made technologies. If they need to develop an alternative, the alternative is not “well, I don’t sell to Europe or the US, because I’ve been banned, let me sell domestically”. First and foremost, they’re already selling domestically, so the domestic business is now replacing that global international business – they’re just doing less, one would argue. They can invest more time in the domestic market, but it’s not going to be able to replace what the different firms are doing, whether that’s Huawei with 5G in China in the UK and Europe – nothing in China can replace any of that.
If Chinese telco firms need to be independent and not rely on any foreign-developed technology that they had access to in the past to create their goods and services, and must now develop on their own, that’s not going to be able to be done overnight. The question is: do they have the time to develop something quick enough to act as a replacement?
Which other regions and sectors in Asia are you identifying good investment value in and what fundamentals stand out to you?
Something which highlights Asia in general is the diversification and differences of different economies. The challenge that we all face without a doubt is the pandemic and its impact on everyday life and economic activity. Underpinning all of the opportunities, there’s this global cloud that we’re all trying to navigate through. When we look at Asia, it is very interesting. In China, there are distinct old economy versus new economy sectors. When you look across Asia ex-Japan in general, there are different markets – Korea, Singapore, Taiwan – that is actually relatively tech advanced, not only from a market standpoint in terms of an investible market, but also in terms of a willingness and acceptance of technology on the consumer side. It is also there from a corporate standpoint in terms of making those available. For Asia in general, there are vibrant opportunities in new technology themes for investors.
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