China Opportunity： Where Global Capital Moves Next

Thank you so much for being with us today, Brian. I know it has been a very busy year for you. The Hong Kong ETF market is booming and also we're hitting that big 100 billion AUM milestone. So maybe start with what kind of products are you seeing most interest and where are you looking to develop further? Thank you, Charlotte. It's a pleasure to be here today. Just a quick introduction on myself. I'm Brian Roberts, Head of Equity Product Development at the Hong Kong Exchange. The ETF industry has really been one of the bright spots of many of the bright spots that we have going on at the Hong Kong Exchange. Today, ETFs are eclipsing 100 billion US dollars worth of AUM and that is effectively more than double where it was just five years ago. So we've seen significant growth that's happening there. Also, for ETF liquidity, the Hong Kong Exchange ETFs listed on HKX, we are now the fourth most actively traded ETF market globally. So that's a big, big accomplishment for the size and the scope of the products that we have here as well. So I think these are two very, very important things that we see. Now, I was just in Japan last week for the S&P Global Conference and it brings issuers, market makers in town from all over the world and Hong Kong was the most talked about ETF market at that conference when it was talking about Asia Pacific. And again, I think all the things that we're seeing, number one, covered call ETFs, we have seen significant growth there. The L&I, the Leverton Inverse ETFs, we have the world's largest single stock L&I product listed on the exchange tracking the SK Hynex performance. And then other things have happened where QQQs has also cross-listed on our exchange last year. So there's a lot of milestones and a lot of eyes and attention that are happening right here in Hong Kong. I want to follow up a little bit on the L&I products, which Hong Kong has been the forefront in Asia to allow listing of that product. And like you said, CSOAPS, SK Hynex is now already the world's biggest. And I think more excitement is that SFC has now expanded the scope that we can cover major Hong Kong listed stocks. So when can we be expecting the first batch and what kind of stock you're looking for there? Yeah, so I mean, again, this has been a really a major development in our market. So the Hynex and the Samsung single stock L&I have been extremely popular and the SK Hynex product, I mean, just kind of depending on the day, it's going to be our third largest ETF that we have listed on our market. And I think what has attracted investors to this, especially retail investors is these are viewed as access products to get into a very difficult market if you're a non-domestic investor. So we've seen a lot of attention, a lot of attraction for these kind of products. The SFC, last Friday, they published the announcement on the back of the success of these products that they're going to extend single stock Leberton Inverse ETFs to mega cap, very large cap Hong Kong stock. So this has been something that we've been working with the industry, the regulators on, have the proper regulations in place. So we'll start seeing these products coming to market over probably the next couple of months. Also, I think there's been a lot of talk about, for example, these L&I products impact on the market volatilities. I wonder if you could tell us a little bit about what kind of structure, infrastructure we're seeing to safeguard that. With these kind of products, there's always a lot of attention potentially around the rebalancing effects that they have as they have to re-gear themselves each and every day. You know, from HKX's perspective, we have very robust risk measures that are in place from margining to make sure that clients' positions are margined appropriately. When you look at these kind of products as well, we want to make sure that they're sizable, that the underlines are, so significant market capitalization and also significant liquidity, but not just liquidity in the stocks, but also within the derivatives themselves as well that can encompass them, whether or not it's indexed derivatives or the single stock futures types of markets or options as well. So from our perspective, we look at this and we feel that there is enough liquidity in the market to be able to absorb any kind of sizable rebalances that happen on a given day. And then I think the same thing with the Hynix products, you know, we've been monitoring that. I think CSOP and the swap counterparties have done extremely well to be able to rebalance those kind of activities throughout the day to have minimal impact into the underlying pricing of the stocks. And what kind of demand are we seeing from Chinese mainland investors, given Hong Kong's important role as a straightaway capital? Well, I think Southbound Connect is really probably one of the big areas for us to kind of look at. I think number one, we've seen Southbound investors coming through Connect. They're now trading about 120 billion Hong Kong dollars a day coming through there, and that's continuing to grow each and every year. Hong Kong ETFs are a part of that, and we've seen really kind of growing demand there. So they're trading about six and a half billion Hong Kong dollars a day through the Stock Connect to get into ETFs. Now, I think one of the big areas of development that we've been really kind of seeing is around the 60-40 concept. So Carter had mentioned that earlier, where ETFs now, based on the eligibility rules of Connect, ETF issuers can construct products that hold 60% HKX-listed stocks and 40% international equities. One of these products was a KRX, or a Korea-Hong Kong kind of semiconductor product. That one has done extremely well. I think it's attracted probably about 600 million Hong Kong dollars' worth of new assets under management, and these products now are becoming a big source of demand for southbound investors, because for them, it's a compliant channel for them to be able to come through and then also get that international exposure. And I think for us, the last thing I'll just kind of mention is we're seeing this kind of growing demand in AUM, in products, and this is also why for HKX, we've now launched a complementary business to ETFs with the indexes. And so we're starting to see more of our 60-40 indices come out, and as Carter mentioned, we've partnered with eFund to bring out a Tech 100, which is a more broad-based, more representative tech index than we see from other indexes out there. We've been on the same panel over the past couple of years, and I think one recurring thing has been the rise of retail investors and how stock exchanges can better do to capture those demands and also liquidity. And now with stock exchanges from New York thinking about expanding their trading hours and already doing so, I wanted to hear about your thoughts on this. Okay. Well, let me kind of talk about retail demand first and then we can get into the trading hours here in a second, if we have time. No, but retail demand, I think a couple of things that we've been seeing playing out for where they're attracting for products. Number one on the ETF space, I've already mentioned single-stock L&I. That has been a big source of interest there. Covered call ETFs, but I'll even kind of broaden that out to be anything that is providing yield enhancement. So if it's covered call ETFs or just kind of dividend premium products, this has been a big source of traction there. So we've seen just in a very short period of time, in the past like 18 months, our AUM has now grown to north of 6 billion U.S. dollars. So this has been a really big segment. The other area to kind of look into is not just on ETFs, but derivatives. Stock options, weekly stock options, moving into that short-dated theme, we've seen significant retail participation in there. And I also think ETF issuers have been very creative to be able to blend income-oriented products with derivatives, and those covered call ETFs have really been able to kind of marry these two strategies together to again bring more retail participation into the market. Now in terms of trading hours, there's a lot of interest. I think what we have kind of started to see is that investors just want to be able to trade kind of around the clock. I think the U.S. markets now have made it very have stated their intention to go 23 by 5. You have crypto markets that are already trading longer than that, and then you're starting to see other discussions in the region around do we extend trading hours. So there's a lot of discussions we're having with the market. We're going to be having more kind of public discussions around do we do anything in terms of extending our trading hours. But at this point, it's still exploratory, and we'll kind of address that with the ecosystem as we go. Before we close out, running out of time, I want to know in one line, what's the most compelling market opportunity you think Hong Kong presents that deserves more attention? It's a tough question. Look, I think there's just a lot of vibrancy and a lot of interest in our markets. But I'll probably answer this one kind of stepping away kind of from my space, which is the equity side. I think two of the things that I'm really interested in is the strategies that from the government is really around building a gold ecosystem and the FIC ecosystem. Hong Kong's always been an IFC. I always kind of say I think they've been more of an equity kind of center. I think now with the alignment across the government, HKMA, FSFC, HKX, and so on and so forth, I do think we can actually become a multi-asset IFC here in the coming years. And to me, being able to kind of complement equities with commodities and fixed income, I think this will be a really kind of interesting development over the years. Thank you so much, Brian. Thank you. Enjoy your lunch. Thank you. The main course is coming out, in case you are wondering. We hope you will enjoy the fish, but more importantly, we hope you'll be more interested in this panel discussion. So first off, welcome to our panelists. You can see their names as well as their titles. Today, we're going to talk about global flows in China. So maybe we'll start with you, Mark, as our group CIO for AIA. Where has the flow gone versus what is the demand? So it's been quite a ride over the last several years. You sort of characterize it by different phases of market evolution, but also changing sentiment as a result of different factors, particularly geopolitical factors. So I think we went through that phase where there was a lot of both FDI coming into China, and there was a building of portfolio flows. There was a topping out almost of participation in the CGB market. We had two very good years for CGB relative to the rest of the world, 22 and 24, when particularly in 22, when most bond markets bombed out, CGB was the safest investment on the planet, which re-profiled China opportunities, I think. But the general trend has been a gradual progressive development, and then on the other side you've got flows coming out of China, which less so on the FDI side, but building, and then of course the narrowness of the domestic financial system necessitates a recycling of that significant build-up in domestic savings, which depending which brokerage report you read can be a different level, but conservatively about 13 trillion US dollars equivalent in the banking system in cash, looking to find a destination to convert savings into investment. So where are we today? A lot of innovation, you just heard from Brian, what's going on in the local exchange. I think Hong Kong is brilliantly positioned to take advantage. Hong Kong can emerge through this next phase as a massive base and centre for wealth management. You've got two-sided, you've got the money coming in of course internationally, and that disaffection that you saw with China, where it looked like at one point the global financial system was going to bifurcate, where it was China for China and the rest of the world for the rest of the world. And if you were in less liquid assets, that's pretty much where we are today. If you're in a private equity fund, or a private credit fund, or venture cap, they're pretty much cleaned out of cross-border activity because the policy risk is such that you can't, you're not very agile, you can't respond. But what we've seen in the absence of that is the build-up of portfolio flows, very significantly now, of money coming into China. And of course that presents some challenges. It's much more sensitive to news flow and economic circumstances and relativity, whether it's rates or risk perception. So you're dealing with a slightly different animal now, you're seeing much more sensitivity around those issues. But the opportunity is there, and I think if we can get that two-way flow sort of stabilising itself as Chinese savings looks to diversify, and as global money comes in continually to access what really are unique opportunities, and we see it close up, we have a very large business in China, so we have Chinese money for China. We have R&D funds to deploy domestically, and we've done fantastically well in the last several years with a number of opportunities in different sectors. You choose your moments, you choose your sectors, you align with policy, and there are some great ways in which you can add value for your shareholders and policy holders. So I think that's pretty much where we are. We're very excited, we think the opportunity is very much there, but you need to stay sensitive to the changing landscape and make sure that you're well aligned with the general direction of policy, which is something we've always said at AIA. I think if we look across the Hong Kong market, my main job is a funds analyst, so I look at the funds market, whether it's ETF, mutual funds, and to Brian's point, Hong Kong market has now surpassed 100 billion, and we are the fourth largest ETF market outside of the US, and so tremendous growth. So maybe over to you, Jeff. We've only had one person here attend your session, the morning session. You gave a great presentation. Maybe you can highlight the three key themes you said about China, which I thought was very interesting. Right, thank you. So in the past, I was managing global capital before, so I was looking at China from a global application perspective. People came to China before to find growth. You buy the beta from China's growth. But now, as we move into the next phase of growth as a country, the focus slightly changed. We see three significant changes that's happening. One is that China is moving from cost leadership to technology leadership. You see EV industry, robotics industry, now increasingly so AI. We have many industries. China is no longer the follower, but the global leader. So global capital would, when they look at the whole industry's roadmap, naturally they will pick these winners. So that's changing from buying China as a whole to selectively choosing stock picking. The second shift is that we are moving to from localization to globalization. Many years ago, Chinese companies can just grow to a massive size by winning at home. Today, you see pretty much every industry is trying to go global. The best companies are building a global business from day one. They hire everywhere locally. They weave themselves into the local fabric of the host nations. And then you see, when you look closely, it's really across all industries. It's not just one or two. In the past, it was just a few manufacturing companies making things locally and export outside. Now they have manufacturing sites everywhere in the world. So we do see a huge wave of Chinese companies going global. And that's a significant change now compared to the past. And the last change, in my opinion, which is quite significant is growing, is changing. The country is changing from growth at all cost to growth with discipline. More sustainable growth. And that means two things. One is that China is making huge efforts by making the environment greener, more sustainable. I used to study in Beijing. The sand storm every year was terrible. And then later on, Beijing was suffering from heavy smogs. Now you see clear blue skies. The reason behind it is that not only China is making a huge amount of investment in renewable energy, but also they're putting the carbon emission into the local government's KPI. And that's pretty powerful. We see a lot of changes. But also, sustainability means that Chinese companies are now more capital, they're better capital allocators. They focus much more on return on equity, profitability, cash flow generation, and return to shareholders. A lot of the good performing, best performing stocks over the last few years in China were companies that's increasing their shareholder return and profitability. So those changes are very in my opinion are large, but they are selective. So people, for global capital, when I look at China, they probably won't buy China just because we're at the bottom of the cycle, but we're not buying the strong growth anymore. But for those companies that are global leaders, technology leaders, global industry leaders, and also great capital allocators, these are the companies that are totally fine. People like Mark would be happy to buy. I think if we look across the China market, I have a colleague within Blooming Intelligence that covers EV. In China, there are more than 100 companies manufacturing EV vehicles. And the cheapest EV vehicle that you can buy in China is only US$4,500, so phenomenally cheap. So the amount of technology that's being invested in China is just incredible. So maybe from your side, Helen, as head of research, what are you seeing? Well, what I'm seeing is, on a daily basis, I would say that my job is mainly to tell international investors what's going on in China, and at the same time, bring back the feedback from investors to Chinese, especially policymakers as well as corporate. So I think I can divide probably this into three topics, especially to fit what we're talking about here in terms of capital flow, which is number one, we're talking about inflow, number two, outflow, and number three, which currency. In terms of inflow, what we recently saw is that a lot of the interests are around Asia, and people are talking about China. However, we're not necessarily to see very strong capital inflows coming in. So, for example, I was recently in Europe, in Brazil, I was in New York, and in D.C., and a lot of people ask about how resilient China's growth is, especially amid this kind of energy shock. And our answer is that we think that actually China is probably the most resilient economy because of its policy response and energy security, etc. And clients will be very entertained while they listen to our stories, look at the charts that we present to them, and then they say, okay, fine, we buy that, no pushback, let's move on. How about Korea? So I think at the moment, I think especially this year, the challenge for Chinese investment to come into Chinese especially equity market is that you've got outcompared by some of the neighbors in the region and for very obvious reasons. And therefore, there is a lot more interest talking about Taiwan, Korea, Japan while China is outshined for the moment. But does it mean that China is not interesting? No, it isn't, because China is probably one of the largest economies where you can see not only just one sector that benefits from AI, but tremendously from a larger, very broad and very big portfolio. So that's actually on the inflow side, we are a little bit, I think at the moment, under pressure but clearly already doing much better compared to two, three years ago. But then if we talk about outflow, China in theory should be a big investor. If you look at China's trade surplus, on an annual basis, we're talking about 1 trillion U.S. dollar plus. Last year was a record high 1.2 trillion. And what do China use? How do they use all this money? Do they actually end up with this saving investment imbalance and therefore a huge current account surplus in a way that they can efficiently allocate the capital? Not necessarily. A lot of this is still in the form of export receipts held by corporate who are currently looking at interest differentials between renminbi and the dollar and deciding, you know what, I can get paid for about 3.5% in U.S. dollar terms while probably 1.4% recently even after some improvement for renminbi for the same term around two, three months. Then why bother? Why would I just settle it back into renminbi? So everyone is just holding on to U.S. dollar denominated fixed income product. Is that the best use of capital? Not necessarily sure. And how about households? Do they make the similar decision? We don't know because a lot of them do not get the freedom to allocate their savings overseas. We have capital control. So people would say that, okay, then what kind of capital outflow are we talking about? Going back to what we heard from Jeff and also Mark, you know, we're talking about not necessarily maybe portfolio investment outside of China, but a lot of ODI. So those kind of direct investment in the form of for example, we saw BYD, as you just mentioned, Rebecca. We saw, you know, for example, Medea, Gree, not only these companies but also CATL and some of the newest technology leaders globally. I think that's actually the current and much more modern way of seeing China's capital outflow. And that I think is the most important thing to probably for investors to keep being reminded of. And last but not least, I would also say that no matter whether it's inflow or outflow, what is also very important is the currency in which that it is being done. And in fact, there is a very important reason for China to keep investing in renminbi terms outside of China. Okay, let's pause there. We don't want to give away all of the answers yet. Sure. So this is a CIO lunch, so we do want everyone here to have concrete takeaways from this lunch. So let's talk about asset allocation. Mark, have you guys recently changed any of your asset allocation? Are you sticking to the 60-40? What are you guys doing? So for us, obviously we're investing to meet our future obligations which is to our policyholders. Don't imagine many people in this room are AIA policyholders. So the good news is 75% of what we do is in our core, what we call the core of the allocation, which is resilience, interest rate, volatility is dampened down through derivatives, and we are positioned to be able to deliver on our obligations under different economic outcomes and scenarios. So it sounds pretty boring, but it's very technical. The 25% is where the interesting activity takes place, because what we're looking there is to enhance long-term returns. And if you look at our policy fulfillment rates, they're very, very high. In fact, they're the best in the market. And what we mean by that is, when you buy a long-term product from AIA that has some crediting rates on it, which are projections, illustrations, you measure to what extent you deliver on those promises. That's the fulfillment rate. And the reason for that is we're able to take advantage because of our scale in distributing our assets widely. So, coming to your question, what have we been doing recently? Now, remember, for a life insurer, recently is on a scale of years. Not hours or days or months. So, more recently, we've seen a significant shift in more private assets, where we're at the same time building up infrastructure to support that, and moderately increasing and progressively increasing our allocation there. Because financial markets are dynamic. And where you can trap and get access to incremental return, particularly in private credit, with risk-adjusted spread or in private equity, that's where the interest has been. We also have large positioning in global markets where we're more or less balanced out, but we have traded a little bit away the market concentration in order to get some stability around the program. So, we haven't seen a massive reallocation to China. We are modestly overweight China, which compares I think to most international asset owners who are probably underweight China as we sit today, the point that Helen was making. And then onshore in China, we're able to take advantage of allocations to local managers who have access to various pools of opportunity, particularly around venture and private equity, where we've seen very good returns in the medical sector, in the companies that are making equipment that is relevant globally. And I think that's to Jeff's point. So, you're picking winners there that are Chinese of origin, but they're looking at the global market. And typically what we're seeing now, and you see this coming through in the FBI numbers as well, you're seeing global firms who are really trying to capture the innovation in China, and they're willing to come to this part of the world, come to China and tie up, take positions in companies, merge, acquire. And that's obviously to the benefit of some of the P positions that we have. And the turnaround has everything. It surprises with speed and execution. P investments, which you would expect to have a modest J curve, or a reasonable J curve, and coming out of that over several years. We're starting to see trade sales come through in one, two, three years. So, it's very vibrant, very dynamic, and we're seeing a lot of opportunity there. So, from a domestic point of view, the allocation is very much on the front foot and taking advantage of that. And internationally, as I say, slightly overweight on the public equity side. If you guys want to know more about private markets, earlier this morning we did several sessions covering the private markets, where I spoke to BlackRock, head of APAC, and they're very invested in the public markets. And she talks about the investment opportunities. But Jeff, anything you want to comment on an asset allocation perspective as a CIO? Right. I always thought global markets, global allocators have a very systematic way of allocating capital globally. The first question you ask is whether we're in a loose equity environment or tight equity environment. If it's tight, then you just shrink into the US and European markets. And that's your core market for global capital. It's the largest size in the index. But when the liquidity is loose, you look elsewhere. But you don't look elsewhere just randomly. You pick the best fundamentals first. And then you look at the variation. Is the variation sensible? For the longest time, China was the consensus trade. It was a great growth story. And then, up to a point, that position has been given to Japan, and last two years, Korea and Taiwan. And those capital allocations are very sensible because they are the easy question to solve. When you look at the order market, and these are the obvious ones to choose. And China is not that consensus trade yet. But as I earlier pointed out, you can find selective companies opportunities in there. So we wouldn't expect significant increase of allocation in China until our fundamental improves. And then I would expect allocation to be slightly underweight for a while. But then, from Mark's point, you buy the leaders in China, global leaders in China. Yeah, that's the situation we're in now. Helen, is there one sector that you like in China? Well, as an IT economist, that's an easy one. We don't do sector picking, nor do we do market commentating. But I would say that probably just to relay our strategist view, the most important and most exciting sector at the moment in China might still be related to AI. And we think this sector is what everybody is already very excited about. So I think, Mark, you wanted to comment on some of the upcoming IPOs. Globally. Whether it's SpaceX, OpenAI. Yeah, I think certainly locally there's a fear of missing out here that everybody wants to be involved. Clearly there are a number of things that we've been trying to assess the impact of. One of which is the readiness for global indexes to take in IPOs ahead of the schedule which they would have historically prescribed. And that requires pre-positioning, and that's disruptive in terms of being fundamentally based. So we've been quite conscious of that, and if anything, that's adding to the concentration risk which you're getting rewarded for on a momentum basis. So I think this will take time to play through, and I think over the next several months it's probably going to obscure what the top-down allocators are thinking, because they'll need to navigate that. I think Bonnie Chen did a session earlier this morning, and she's commented on the SpaceX IPO and how as Hong Kong and China you can't get access to it. But she was like, even though you can't get access to it, I'm sure that as part of the food chain or the supply chain that some of the companies further down along SpaceX are in China and in Hong Kong. So by default you'll still get access to that through some of the local companies. So if we look towards China and the investment opportunities, Jeff, what are they? Pick one. Investment opportunity in China. Would it, yeah. Again, the problem is that the fundamental for AI is so dominant. It's so much better and the size of the opportunity is so much bigger. That's precisely the reason that pretty much in every country, in every market, the AI companies' performance are doffing the rest, which is sensible again. When Anthropic is generating that much return and growing that fast, it attracts the whole world's capital into this sector. So that's AI. And then for you, Helen, you've looked at China for many years now. If you look at where the investment opportunities were before and now, what are some of the differences that you see? I would say that the global trendy mentality is always to look for something that globally, everywhere else, everybody is talking about. However, I would say that the shift has clearly come more visibly to China if you look at China more closely. Nowadays, I would say that probably beyond AI and out of consensus would be maybe going forward more focus on culture and entertainment, service-related sectors. For example, I happened to come across to an airport store yesterday because I happened to be at the airport two hours ahead of time, which never happened. And I just realized that this is in Beijing. The Forbidden City souvenir shop at the Peking Airport Terminal 3 was so impressive. I was completely taken back because last time I checked, it was probably one-tenth of the stock over there. Now, the variety is completely overwhelming. I think that we are probably overlooking some of those areas while we're focusing on what everybody is talking about. Mark, any comments? Yeah, I think that's a great point. There's a sort of conventional view of the Chinese economy. People haven't been into China for some time. I think they'd be surprised by what you see particularly in the tourist sector. The quality, the service, the opportunity there is palpable when you visit. I think the other aspect, again, coming back to what I said before, I think biotech medical supplies. China's leading the world. It dominates new patents in healthcare. If you're in that segment of the global economy, you have to do business with China. International firms have a problem. The pharmaceutical firms are struggling because they've got retiring patents. They're cash-rich. Either they invest the money or they return it to shareholders and shrink. I think the opportunity is there to partner up and do business in China. I think it's already forthcoming and I think it's going to be a growing trend. The other aspect, of course, which I think Jeff has referenced is if you want to do large-scale automated manufacturing, there is really only one place in the world that's going to give you the support and the infrastructure and the supply chains. Although Chinese firms are investing overseas, I think China is going to continue to dominate manufacturing and it's through the application of AI and automation at scale. I think international firms are going to make money out of it. If you were at the China Development Forum, that was clearly the message up there in Beijing. Jeff, maybe you can comment on how Chinese companies are becoming more global now, whether it's on the pharmaceuticals, healthcare, AI, tech space? Absolutely. Many years ago, very few Chinese companies even have a proper English speaking personnel. Now, they are building factories. If you visit some of the branches for Chinese companies in Southeast Asia, now they make stuff in Europe and hire people in Latin America. You look at BYD's operations there. They are so savvy now with global operations. They learn really a long way. That makes these companies capable of growing everywhere and whether all the international turbulence, geopolitical pressure with their setup. Also, because as per Mark's point, that was manufacturing, but per Mark's point, the biotech industry, because we have such good cheap engineering capability. I mean, sorry, I wouldn't say engineering, but R&D. In a sense, because we are at a slower phase of drug discovery, you are optimizing the chemical structures and it's just high speed, high throughput iteration. That's engineering capability. That's why we did it the best. That's why for the next phase, until we have the next big breakthrough in drug discovery, all the innovation will be done for the next few years in this way and Chinese companies are going to do it the best. International companies will come and purchase them because it's so much cheaper. Same with all this, we talk about SpaceX, AI, SpaceX, NVIDIA, all those companies, their ambition to grow, they rely on Chinese supply chain. The technology frontier are all dominated by Chinese component manufacturers. These are the going global wave. You see everywhere, even the culture side. I mean, Helen talked about culture. We see Chinese games, movies, e-commerce platform, etc. We are exporting culture too. We are slower than Korea but we are doing it. Korea is definitely very strong in the Korean drama space. Helen, is there anything that still surprises you about China or what's one thing that you find really interesting? Well, I think China probably still has its to-do list very high up there, the task of rebalancing. We were hoping that after a record year trade surplus last year, there could be more rebalancing this year and not the least because last year we've seen a fantastic sharp deceleration of fixed asset investment which we hope could see some reversal of this year. First quarter, it was indeed coming back a little bit but not enough. By April, things were already coming down pretty notably. I would say that if China could manage to rebalance more successfully and could balance its capital flows, I think that could be the last check in the box so that we can see China moving more smoothly from a middle-income country towards a developed market country one day. Any time frame on when you think that will happen? Oh, that's what economists love the most. We can push the timeline a little bit further out, let's say in the next five to ten years. Mark, any comments? Well, we've been talking about this for a long time. It's a slow process. Having the confidence to liberalise your capital account is a massive undertaking and we'll continue to see policy measures to formalise the way that money can come out rather than leak out. I think that's the way you've got to approach this. You've got to take advantage of the opportunities as they come up, of the liberalisations when they occur and you've got to align yourself with that. I think we heard this morning in terms of what's available here in Hong Kong. That's why it positions Hong Kong so strongly because Hong Kong is the natural venue for these developments to occur in. You can be optimistic in terms of what it throws up because of the restrictions, but it's hard to be too optimistic in the near term of a major restructuring. Jeff, do you have any insights as the largest asset manager in China? Chinese people are long term. We have all the time to make it happen. Five to ten years maybe. Before we end, one takeaway you want the audience to know today. Let's start with Helen. I would say that probably today what impressed me is that both of the two CIOs on my panel are probably so constructive and more so probably because of their medium to long term view. I hope that more of our investors would take this similar approach. Jeff? I would say stay optimistic. There are lots of good things happening. Although the general beta is not necessarily what we hoped. Structurally, there are lots of good things happening. Focus on those things and the beta will come back one day. One day. Five to ten years time. Mark? I would encourage people to go and see for yourself. I think the narrative that you pick up on the news wires and the news flow, it's hugely distorted. Don't forget we went several years without international allocators visiting China. They're out of touch. There's been huge development in the pace of development. You mentioned Beijing, clean air. If you take a snapshot of three or four years difference in time, don't visit Shanghai or Beijing. Incredibly different places as a result of restructuring in the way the transport operates, the way the energy is transmitted. That's on the surface. As a professional investor, go out and see the company. China is very, very different. As many of you may know in Hong Kong, many people are going to Shenzhen on the weekend. If you go to Shenzhen on the weekend, raise your hand. Okay, about half of you. That's a lot. We're asking every panelist this question. How is your company using AI and any impact to jobs? No impact to jobs yet, I guess, is the best way to say that. But we're using it. If you haven't used it as a learning tool, it's tremendous. You can sit down and teach yourself something, I don't know, fly fishing or something, and the speed at which you can acquire the knowledge and the expertise is incredible. What can take place previously in months can take place now in a matter of days because of the constant interaction and the stylizing of the learning based upon your reaction and your input. Put it back in our business, where we're having the biggest impact, which is slightly counterintuitive, is in the training of our life insurance agents. It's still the case that two-thirds of our distribution across the region, and particularly here in Hong Kong and in China, is propagated, is transmitted through life insurance agents who go out into the communities and give people the confidence to manage those longevity risks that they are exposed to. So, by getting agents that are productive in the field more quickly, you can accelerate your business. Historically, that's a very difficult thing to do because you make a big recruitment. You bring people together. You have a very standard, analog style of knowledge acquisitions and then when you've acquired the knowledge and you have to practice, as is everything, it's an apprenticeship. You need time to build up your experience. But with AI, you can shortcut that tremendously. It takes about a third of the time now taking a talented individual who wants to be at the forefront of our business, at the front end of our business. You can get them up to speed with experience because of the way AI allows you to adjust for the iteration for the response. And it can help you with your tone and your structuring of the way you present and answer real-time questions. It just gets you up that learning curve so much more quickly. So, long answer because I'm quite excited about this because I see the real impact there. So, it's not so much a processing productivity gain. It's much more about a growth productivity gain. That's, I think, the real way to capture the AI thing. Jeff? We're still exploring. I think that the challenge would be how to integrate local within the company data to external data. There's regulation on this and for AI tool, if you can't connect those two, it's really challenging. In terms of use case, per Mark's earlier point, not only learning tool but also productivity tool. But we're trying to do more than this. For example, my team is trying to build an agent that's distilled me. We want to know your taste about stocks and hopefully we can, in the future, find similar stocks that suit your criteria. That's what AI native team research and investment looks like. I don't think many... We're trying to do it. It takes a bit of time. Same as Mark. Excited. I wouldn't repeat what he said. As an economist, I would remind everyone that AI doesn't destroy jobs. It replaces jobs. We believe that those with the highest level of adaptability, flexibility, would be able to still maintain their jobs and probably get better jobs and be empowered by AI. We can see it literally from a day-to-day work as our juniors are now increasingly coached by AI. When they couldn't understand what I meant, they basically sent back what I said and then AI would say, yes, your boss sounds right. You should do it this way. I was like, yes, AI is right. I believe that this could help both sides. At Bloomberg, as a tech company, we're currently developing what's called ASCII. It's called Ask Bloomberg. It's a Bloomberg AI. We're only in the early phases. As a research analyst, we're told to feed the baby. We're constantly giving information. From our perspective, what it does a good job of is it aggregates our research because as research analysts, you're constantly publishing. Within the terminal, it's very difficult to find the information. The ASCII function has been good at aggregating a lot of our research. For investors like yourselves, I don't know if you guys noticed, but inside the terminal, there's now an AI summary. Instead of reading the full article, you just read the three lines that bullet points and summarizes our article. With that, we want to thank you all for joining us here today. A special thank you to eFund, our sponsor for this lunch. I do have to make a correction. In the bag, you will be getting an exclusive eFund umbrella and not the Bloomberg umbrella. Unfortunately, the Bloomberg umbrella will still remain very elusive, but if you do want one, please feel free to contact your Bloomberg rep and I'm sure they'll be happy to give you one. With that, thank you all for joining us and thank you very much for eFund.