ASX week: Eu-Jene Teng – Investing in EV’s without buying Tesla

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:00:30] I'm very good. Bryce Great to be with you again for our latest ASX week episode. We love these weeks. It's a real opportunity to speak to some of the best in the business and hear about the sectors and the companies that they're looking at. And today's episode is no different. We're going to be looking at a part of the market will a part of the world. I think that we're really fascinated by, but still have so much to learn. And that's emerging markets. 

Bryce: [00:00:56] That's it. It is our pleasure to welcome Eu-Jene Teng to Equity Mates Eugene. 

Eu-Jene Teng: [00:01:02] Thanks, guys. Happy to be here. 

Bryce: [00:01:04] So this is part of the ASX week here at Equity Mates Media. We've been lucky enough to partner with the ASX to bring some of the best sessions from the ASX investor day. Just a reminder that if you would like to catch Eu-Jene's presentation, plus many other presentations from experts both from around the country, head to the ASX Investor Day website. There'll be a link in our show notes and you can get on demand for about the next three weeks. And yeah, catch up on some of the presentations that you might not hear on the Equity Mates Media ASX week, but Eu-Jene is a client portfolio manager at Martin Currie Investment Management, which is part of Franklin Templeton, who manage two point one trillion and is the sixth largest asset manager in the world. So we can't wait to get stuck in and Ren, as you said, we're starting with emerging markets. 

Alec: [00:01:53] Yeah, we are. And you're saying you make the point in your ASX investor day presentation that the world's economic order is changing. I think that's the first statement in your presentation. So you definitely start strong. You start with a bang. So for our listeners who are yet to watch your presentation, can you explain what you mean by this and how the world economic order is changing?

Eu-Jene Teng: [00:02:18] Yeah, I'm happy to do that. First of all, just to provide some context and why it's important to understand this. When I talk to people from overseas, whether in Asia, Europe or America, they are constantly amazed that as Australian investors, we are based in the Asia Pacific. But very few of us invest directly in emerging markets such as Asia or even consider it. So most Aussies either buy Aussie investments or they're European or US investments. And I think it's really important because essentially what we're doing when we're doing that is we're boxing with one hand tied behind our back. So if you can just keep the boxing analogy in your mind, I'll take you through what I meant. So emerging markets form a very substantial portion of the global economy. So currently it's 40 per cent of total GDP, and the growth in global growth is 50 per cent coming from emerging markets. And that's what I meant by boxing with one hand tied behind your back. Now the incredible thing is that over the next five years, that's expected to increase by 60 percent. The 10 biggest global economies ranked by size are forecast to grow significantly over the next 15 to 20 years. Now, interestingly enough, by 2030, seven of the 10 largest economies in the world will be in countries with China and India and the top two positions America, Indonesia and Turkey rounding out the top five. Even right now, six of the 10 largest economies in the world are already emerging market countries. So what this means is that it creates many exciting opportunities for investors. 

Bryce: [00:04:03] Eu-Jene, what should we know about emerging markets as investors? How are they different from developed markets? And, you know, when we're thinking about the research process, are there any additional steps that we need to be considering from 

Eu-Jene Teng: [00:04:15] an investing point of view? I think the first thing we need to get out of our minds is the old emerging market story. So in the old days, it used to be let's sell them low value stuff like socks, clothes, shampoo, right? They used used to have stories like Nestlé that the old investment thesis. I'll chop up my 10000 litres of Milo and put them into small packets, and I'll sell them to Indians who can only afford that one small packet of five cent drink. That's completely different now. But the bottom line for investors is this is that the emerging markets have changed so much that they now provide more investment opportunities at a good price. So first of all, they are better value. So a measure that we use to measure that is called relative price to book. Very common measure M is significantly cheaper than developed markets. And not only that, but it's current at a. T lo. The thing we want to do is we want to buy when prices are low. But the problem is when prices are low, we don't feel like buying. Now the second important thing about him right now is that they have better growth opportunities. So a very common measure we use is return on equity. It's a measure of financial performance. And the interesting thing is that the forecast over the next 10 years is that M growth is going to be higher than developed market growth. Now back to your question about additional steps that investors should take. What we would say is they do need to think a bit deeper for EM countries because by definition, they're still emerging. So investors need to pay attention to geopolitical issues and top down larger picture macro macro economic issues. There's also a wide range of cultures which investors need to be aware of. But all these differences provide many opportunities. 

Alec: [00:06:16] Yeah, one particular thing that I think traditionally a lot of investors are sort of scared a lot of investors off emerging markets is that sovereign risk or regulatory risk, that political uncertainty that comes with some emerging market countries. How do you approach that risk and how do you try and I guess, quantify and manage that risk in your portfolios?

Eu-Jene Teng: [00:06:40] Most stock pickers, when asked, How do you? The question that you just asked what they will usually say is, I'm a bottom up stock picker. I pick the best stocks, so my stocks will drive the returns. So I don't look that much of the bigger picture unless you're talking to a macro investor, right? Our view is that these sort of issues, geopolitical issues and macro issues are important, especially for emerging markets, because you're covering the whole world and we use it more as a risk mitigation framework to make sure that we can measure Brazilian energy company with one in China, with one in Russia, and we can equalise the risk for them across the board. So then you just pick the best ones. Know how we do. This is that we identify top down and structural challenges, whether the macroeconomic issues or geopolitical issues. And we do this from a qualitative point of view and also a quantitative point of view. So qualitative meaning we we have ideas around that and we contextualise the issues and quantitative is where we put numbers next to it. Now the quant inputs are issues such as country financial issues like interest rates, government institutions like transparency, ease of running a business and the ESG issues by each individual country. The contextual qualitative inputs looking at things like What are the demographics that are driving the growth in that country and what are their geopolitical issues? Now, when we put all that together, we have one number that we use, which is called the cost of equity, i.e. how much is it costing me to invest in this country? So a riskier country, the cost of equity would be higher and your position size would be smaller, different example. They are incredibly good and cheap banks in Russia, but our position sizes are constrained by the tensions which are going on in Russia. If you remember, a few months ago there were 100000 troops positioned at the Ukrainian border, and arguably right now you could say that there's a proxy conflict going on in Russia. So even though we love Russian banks, some of them and they're really cheap and really good, we're constrained the now. What that does is that it constrains all size of investment each country, and it allows us then to focus on the stocks instead.

Alec: [00:09:14] So sometimes when I listen to emerging markets, analysts talk and I hear about like what you get to look at old. I get very jealous, just like seriously scouring the world for just these random opportunities that you can find anywhere Facebook boring. But. Well, I think one thing that really struck me in your presentation was talking about how these emerging markets have changed. And in particular, you know, the opportunities that you're saying throw out, I guess the old school idea of what an emerging market economy is. Can you elaborate on that and tell us what some emerging market indexes look like today? 

Eu-Jene Teng: [00:09:52] It's about the composition of the sectors, right? So without wanting to be rude, it's no longer your grandfather, those emerging markets, right? So they're not digging stuff out from the ground. And they're not just manufacturing widgets, cheap widgets that they're selling to us for $2 a pop. I mean, they still do that, but it's way more than that. A lot of E.M. companies are now intellectual property leaders, and they are global leaders, they're the top of the pile. So give an example about their changing composition. Ten years ago, a third of emerging market economies were energy and materials. So stuff that you dig up from the ground and then you just manufacture like steel. Now it's less than 15 percent. Almost half of the emerging market economy of the benchmark is now technology, consumer and communication services. In fact, if you overlaid even with developed markets, you could you would be hard pressed to see the difference. They look very, very similar, and a lot of people don't realise that. Now what that means when the investor is that even looking forward, it's high return and capital light, which means you don't need to spend much money to get your high return. Its value added economy so previously was old economy. Mining and manufacturing. And now they look broadly very similar to DX and know essentially what that means in a nutshell for investors is that the quality of opportunity set has grown bigger in him with cheaper, better growth and quality of opportunities. 

Bryce: [00:11:27] So, Eugene, there are plenty of emerging markets to discuss, but of course, it wouldn't be a true Equity Mates interview if we didn't pin you down and ask for just one. So what is one emerging market that is particularly exciting you at the moment? 

Eu-Jene Teng: [00:11:43] It's a theme that we have never seen before in human history, and it's China. China is an incredible story, as we all know. They have seen the biggest rise in the middle class in human history in the last 30 years, and they're still going to be a lot of growth. And interestingly enough, keep in mind beyond the macro issues, China is such a big country that you can pick the eyes out and just pick the best quality investments. So reflected in that stature of China is that its growth and weight in the emerging market index has doubled over the last 10 years to a third of the whole emerging market index and within China and the asset class. More broadly, they are they are innovative and world leading companies which have grown and emerged. So just to give you an example of this innovation, which leads to incredible products and services, you look at China and India, they have seen enormous growth in the number of science, technology, engineering and maths graduates. It's helped to create a highly sophisticated workforce. China and India are at the top of the pile in terms of producing these stem graduates. This leads to innovation and world leading intellectual property. The other outcome of this is that China is number one in terms of producing the most patents globally, which once again generates more exciting, innovative products and solutions. Ultimately, this points to the biggest opportunity globally being here and crucially within countries like China and India and the like.

Alec: [00:13:21] Yeah, there was an interesting slide in your presentation that showed the amount of STEM graduates coming out of China and India and then compare that to some other countries. And it is, you know, they obviously have bigger populations to begin with. But just the absolute number of of graduates in those fields is pretty phenomenal. But Eugene, you know, we can't talk about China and investing in China without touching on some of the recent news that has sort of been capturing headlines around the world and definitely in Australia. Two things really come to mind. Some of the tech regulation that we've seen and then also ever grand and and you know, the the effect that that will have on the Chinese real estate market and the broader economy. Let's start with the tech regulation. How do you think about the crackdown on gaming and you know, some of these other businesses? How, I guess, do you think this will play out over the long term? 

Eu-Jene Teng: [00:14:19] Yep. So we've been following this very closely, of course, as investors in the region. And none of this has actually surprised us. The the picture was uncertain was the timing and and the specifics of what the Chinese government was going to do. But keep in mind. So first of all, as we know, China's regulatory model is distinct from Europe and the US. It's a top-down state coordinated economy which places a lot of responsibility on the central government, so the population expects the government to improve their lives, basically. And these policies have been very successful in propelling the Chinese people's economic growth, and it's lifted hundreds of millions out of poverty over the last few decades. That's actually done, though, is that the population now has very high expectations and different expectations today than even a decade. And the party's objectives have evolved to reflect this. So what the Chinese government is promoting is social fairness in Chinese society and common prosperity for its population. Now what that means is that they have three key focuses anti-monopoly. Number two, payment regulation. And Number three, data privacy and protection. Now, the interesting thing is these are three key areas which governments all around the world are grappling with. It's just that the Chinese government is doing it in a much more top-down kind of way. Now, in the long run, we think that good companies will actually be more sustainable in terms of their business practises at the industry level and for the more responsible operators within each industry. This is likely to improve their competitive advantage and actually increase or hasten the exit of unscrupulous players. Now what it does, though in the short to medium term, is that uncertainty and volatility increases. But that's actually when you pick up good value investments. Now, in a nutshell, what I'm trying to say is that these tech companies are basically too big for governments, not just in China, but globally to ignore. 

Alec: [00:16:32] So then if we turn to the other, I guess, China related issues, that's captured headlines. Evergrande, the one of the biggest Chinese property developers, is in a bit of debt trouble, and people are worried that that could have spill-over effects to China's economy and potentially even to the world economy. How do you assess that issue and does it change your thinking about, I guess, the macro situation in China at all?

Eu-Jene Teng: [00:16:59] If so, what it's done is it's and we've known this was an issue for a long time. So first of all, we do not hold real estate companies within our portfolio of emerging market portfolio because we just don't think the dynamics of those those companies within emerging markets is good, especially developers. And Evergreen was well known as one of those that you want to stay away from. So we focus a lot of this on of a lot of our research on what is the impact of what's happening to epic Ren on our portfolio. So first of all, no exposure to Evergrande or any other Chinese property company and the concerns in the real estate sector in China are driven by the situation in every brand. But we do. Having said that, we do have industry exposure via financial and utilities holdings within the portfolio, but they're incredibly small. Our portfolio has not been affected. And given that these exposures to so small, we do not expect a material impact on our portfolio. Now the bigger issue is that this is going to be a shock for us dollar offshore bond investors, essentially foreign investors who invest in Chinese bonds in US dollars because every grant is 10 per cent of that market. And you've we're already seeing the shocks there. It's essentially not great not just for Chinese bonds, but for emerging market bonds. And it's a bit of a multi asset class shock in that sense. So what I'm trying to say is that the cash flow from the developers will be for want of a better word encouraged by the Chinese government. So it will happen to first go to pay supplier creditors, which is what we call the unfunded debt to prevent mortgage delinquencies and then the onshore loan holders. So Chinese bond investors, so very likely. We believe offshore bond investors will get very little recoveries and they're basically going to be last in line. But essentially, we do not view this as a likely systemic, catastrophic event for the Chinese economy. 

Bryce: [00:19:15] So, Eugene, we're going to take a closer look at one of the opportunities that's exciting you at the moment electric vehicles. But before we do, we'll just take a quick break to hear from our sponsors. So, Eugene, let's do a bit of a sector Deep Dive in your presentation, you discussed the opportunity around electric vehicles and you presented your preferred approach to actually play this trend. Can you explain what segment of the EV supply chain you're currently looking at? 

Eu-Jene Teng: [00:19:43] Yep. So just to give some context around that, I'm going to use the example of the gold rush in San Francisco in 1880 one, because that's when we were

Bryce: [00:19:54] like this, this this, 

Eu-Jene Teng: [00:19:57] and I'll tell you why that's important, right? So 1881 little accounting firm in Edinburgh Martin Currie, our clients ask us, Hey, can you invest our money? And we want growth? So we went into the exciting emerging market then, which was the United States. We then invested in the gold rush. Now when does a gold rush? What does everyone do? They got the gold right? But how many people do you know that made a lot of money from digging gold? Not many. So what we did instead was we went to other parts of the value chain. We invested our clients money in the transcontinental railroad. And it's the same thing here. We're looking at other parts of the market rather than just cars or rather than just digging up lithium. In our view, the EV supply chain. Batteries are highly exciting and this is the reason why the opportunity is developing because the auto industry is going through a rapid and tremendous change. Now, just to give you an idea, the global auto industry is very mature. It's a 100 year old industry with sales of roughly 100 million plus units of cars per year. All of that is changing right now before our eyes. Not just because of what governments are doing, but also because of demand, I'm sure. But if you talk to most of your mates, if they could buy a Tesla at a reasonable price, most people would be happy to have one now within the industry. Electric vehicles are forecast to increase from two million a year to 10 million a year and beyond. Batteries are the key value add within that Tesla car. The cost of it is 40 percent the battery, so auto component manufacturers generally have created more value than the actual auto manufacturers. We want the makers of this key intellectual property, and the beauty of it is there's no need to pick a specific car manufacturer to win the car. The battery manufacturers have a very diversified order book from all the car manufacturers, and they are six battery manufacturers in the world who control 80 percent of the market and five of them in emerging markets. 

Alec: [00:22:13] Yes. In your presentation, you spoke about the major suppliers. I guess, you know, it's interesting to say most of them are focussed in emerging markets. When you think about car makers, you think about, you know, the Teslas, the Fords, the General Motors in the states or, you know, the Mercedes and BMW and stuff in Europe. But it's interesting, interesting to say this key component is focussed in emerging markets. Why is that the case here? 

Eu-Jene Teng: [00:22:41] It's a combination of historical development and ownership of intellectual property and low cost manufacturing. Just to give you a bit of context around that by what I mean is that China has about 80 percent of the world's battery factories currently, right? They have 93 factories. America has four. No, not 44. And China is expected to build over the next five years, another 40 plus factories. America is expected to ramp up its battery manufacturing factories by more than 100 percent. So they're going to grow to 10 and the EU will have 17. So that's the context. Now the big question is why? And I put it down to two words opportunity and focus. So emerging markets have had major advantages historically, such as cheaper labour. So that allows them to dominate manufacturing industries. They have lithium reserves, which then leads to greater lithium production. So give you an example. China's production of lithium in 2018 was 800 metric tons. That is a 10 times more than America's production. And China's lithium reserves is one million metric tons. That is 30 times more than America's reserves. Interesting. 

Alec: [00:24:04] It's pretty incredible. So you mentioned there were six companies in this sort of that owned 80 percent of the market and of these sort of key supplier to the EV industry. Of those six? Are there any that you particularly like or are you investing in all six so. 

Eu-Jene Teng: [00:24:24] We invest in a few of them. And also within the ecosystem, so let me just take you through that if you if you look at it, there are enormous opportunities within the whole ecosystem and the supply chain, and the theme is expressed as follows We have battery manufacturers in China and Korea. So Korea would be Samsung SDI, LG Chem China. We have Seattle mints and we'll see lead. We also have a copper manufacturer because copper is crucial to EV manufacturing in Chile, and we have a Taiwanese charging station business called Delta Electronics. Now that one's really interesting. We know currently that people think if I've got a TV, I'm going to charge it right. So even at the best charges, like going to the Tesla, the ones you have to wait for about half an hour. What they do in Taiwan, which is really cool and I can't wait until we can have it. Here is you go to you, subscribe to a monthly subscription, you go to what looks like a Australia Post appeal box. You open your vehicle like your electric scooter. You take out the battery. You use your app to open whichever door opens up. It opens up and you just swap your battery so it takes you one or two minutes. You don't pay anyone, you don't talk to anyone. And it's so clean and you swap your battery and off you go. 

Bryce: [00:25:53] That's cool. That is cool. Eugene, how are these businesses building sustainable competitive advantages in this space? Or is there a risk that at some point batteries will just become commodities over time and it'll just be a supply demand situation? 

Eu-Jene Teng: [00:26:08] So the answer is yes. They will become cheaper because of scale, but it's going to benefit the battery companies. And let me explain what I mean by that. The simple answer is, and I'll use the phone in an analogy for this, right? If the phone that you have blew up in your pocket, that would be a bad thing, wouldn't it? 

Bryce: [00:26:32] You could say that. 

Alec: [00:26:34] Look, it wouldn't be ideal, 

Eu-Jene Teng: [00:26:37] and it's the same situation with a car. What you do not want is your car battery to blow up, because that would be disastrous. So what I'm saying is that the six biggest car manufacturers house battery manufacturers are likely to retain their leadership because if your car manufacturer you do not want to outsource your batteries to a start-up, you need someone who has proven over decades that their batteries do not blow up. That is step number one. That is really, really crucial if you can prove that as a start-up, and it's going to be very, very difficult for a start-up to prove that it's unlikely that you're going to get customers. Now, in terms of sustainability, you've got that piece. Plus, we expect the batteries to be commoditized in the sense that they're going to become cheaper because of scale. But all that does is it increases the volume of sales for the battery manufacturers. And the beauty of it right now is that the battery manufacturers has have multiple times more orders than they can fulfil. So their biggest risk is not being commoditized. Their biggest risk is am I able to produce enough batteries built in our factories to produce enough batteries over the next several years?

Bryce: [00:27:57] So, Eugene, before we move to our final three questions, I just want to ask one about, you know, how retail investors should think about getting access to a lot of these companies that you've spoken about or emerging markets more broadly because we spoke at the top about, you know, the regularly regulatory risk sovereign risk that comes with investing in emerging markets and how, you know, over time, the indexes have changed quite considerably, and I'm sure it's only going to change considerably over the next sort of decade or so. So for those that have just joined Equity Mates and and are listening to this and feeling like they don't know where to start, what sort of advice would you have? 

Eu-Jene Teng: [00:28:36] There's a there's a few ways of looking at it, and the answer is it depends. And what I mean by that, it depends on what you you want as an investor and what kind of investor you are. So if you are a person who loves digging through the weeds and you spend all your time thinking about investing about money, about super, then you could buy the stocks yourself. You can do that now via your CommSec account and many other online brokers. The thing you need to watch out for, you've got taxation issues, you've got currency issues, macroeconomic issues, language barriers, all sorts of stuff like that. But it's doable. But the risk is much higher if you buy the shares directly yourself. Now, in terms of your options, in terms of. Listed vehicles, you can then look at ETFs and there are two kinds of ETFs. You have the index holding ETFs, which you can use, and then there are many brands that do that, like Vanguard and iShares, which is owned by BlackRock. Or you can use an active ETF like ourselves. So we have an ETF. And he a plug for ours called EMMG. So the stock on EMMG, it's based on the managed fund. The Managed Fund has been running successfully for more than 10 years and the fee is very reasonable and we have produced quite good outcomes very successfully for investors over that 10 year plus period. So the long answer to your short question is you need to have to think about what kind of investor you are. Hmm. 

Alec: [00:30:15] Well, Eugene, I appreciate that you gave our listeners all the options rather than just giving your your ETF and your managed fund a plug. But we will give it another plug if people want to check it out. The ticker code was EMMG. Yes. Yeah. Nice. 

Eu-Jene Teng: [00:30:32] Actually, just just a quick one on the on the our emerging market team, right? They currently manage 10 billion dollars around the world for pension clients all around the world. Industry super funds in Australia. Pension clients in the US, retail investors globally. The interesting thing about this team is they do not invest anything else. All they do is invest in this strategy and every single client, whether you are a super fund, a pension fund in America or a retail investor in EMG, you all get exactly the same portfolio. 

Alec: [00:31:09] Nice. Yeah, that is interesting. So, Eu-Jene, we love to finish with the same final three questions for every expert investor we get on the show. But before we do, we'll remind our audience that if they want to hear more from you, Jane, or any of the other experts that spoke at the ASX Investor Day, they can head over to the ASX is website. The link will be in the show notes, and they can watch all of those presentations for free. So jump over and learn more from some of the experts that the ASX got together. But Eugene, the first of the final three questions we like to ask is do you have any books that you can sit up? Must read? 

Eu-Jene Teng: [00:31:50] Now I have been through your website a little bit. I did see the book section and they are very, very good investment books there. So I'm not going to recommend an investment book, but I'm going to recommend a book that my Year 12 economics teacher said you need to read if you want to understand economics and finance, because without this book, you will not understand why things are happening the way they are happening, and this is very crucial, especially for emerging markets. It's a book written by Jonathan Lynn and Anthony Jane, and it's called Yes Minister. There's a book for it. There are two TV series and there's an audio book I checked on Amazon the other day. You can get them all for less than $20 each. Wow.

Bryce: [00:32:40] TV series. That's up my alley. 

Eu-Jene Teng: [00:32:44] Now the reason. So if you don't feel like reading the book, watch the TV series. And the reason why this book is important is because it explains to you geopolitical risk and why governments do the things they do and investors who live within that ecosystem. So it's really important to understand why things are happening the way they are. 

Alec: [00:33:05] Nice one. Okay, great. Great recommendation and appreciate the plug for our website as well. We should we should get more people to do that. The second question we like to ask. Forget valuation or how good an investment it is today. Just purely looking at the company and its fundamentals. What's the best company you've ever come across? 

Eu-Jene Teng: [00:33:29] Look, there. There's so many good companies. So I had to pick one, which was very specific to the COVID 19 pandemic and all our lives, and this will impact every person I guarantee who listens to this podcast. So we've been through such a tumultuous period because of the pandemic's with flowing impacts, such as the shift of the consumer away from services to goods and the subsequent strain on supply chains. So I've picked a stock, which is one of our biggest holdings, actually, it's our biggest holding right now. It's crucial to so many items which are integral to our lives, from our phones to our cars to the items in our kitchen to the TV, the PlayStations and entertainment rooms. It's called Taiwan Semiconductor Manufacturing Company, or TSMC. It's the world's largest semiconductor manufacturer. Now he is the. Beautiful thing. This was once such a low value, low profit business that almost the whole world outsourced to them, right? No one wants to manufacture computer chips. It just basically melting sand and glass and putting it back into computer chips. Very boring part of the value chain now that companies and countries who are happy to outsource this over the last 30 years to a little factory in sleepy Taiwan, which has now become the bottleneck for products and services for companies, pretty much all the major computer chip manufacturers in the world. So whether you're Apple, AMD and Nvidia, all their chips are manufactured by TSMC. Now, here's the interesting thing. TSMC now is so far ahead that no one is going to catch up to them for a long, long time. They're chips now are manufactured to the size of two nanometres to give you some context. One nanometre is one billionth of a metre. A strand of human hair is 2.5 nanometres. Hello. Chinese manufacturers right now can only manufacture to 20 something nanometres, so they are multiple generations behind. TSMC has 53 percent of the world's market share of computer chip manufacturing. The next closest is not even close at Samsung, with 17 percent. Now the other, the final thing that gets me very excited about TSMC is the financial part. So over the next two years, earnings per share growth of 15 to 20 percent return on equity, which is your profit of 20 percent. That's 27 percent. I'm sorry. That's almost double of what Warren Buffett looks for in company means that he wants to invest in. And the fascinating thing about this is these kinds of opportunities are unique to emerging markets. You cannot get them in America, and you definitely cannot get them in Australia.

Alec: [00:36:31] Yeah, that I was about to say. It's hard to sum up just how good a business TSMC has been. But Eugene, I think you did a pretty good job of of summing it up and talking about how transformational it has been. It is a fascinating business story to tell. I guess I have watched unfold or to look back and reflect on it, but also to continue watching it just an hour ahead. So, Eugene, final question. If you think back to your earlier days just starting out in the industry, just, you know, learning the the skills of investing. What advice would you have for your younger self? 

Eu-Jene Teng: [00:37:10] I've got three pieces of advice, but could give you a bit of context. I am very risk averse, which is interesting because we we invest in emerging markets, but I'm very risk averse. So the three pieces of advice I would give to my younger self, no one know yourself better. The emotional part of investing is very, very important. Number two, know the world better when I think back to when I was younger. Maybe it's part of being younger where we think we know everything. And we're very confident. But there's so many things that we don't know. And as you get older, you start to realise that so knowing the world better. Number two is really important. And number three, once you know yourself better and you know the world better, take more calculated risks. 

Bryce: [00:38:02] Love it. Yeah. Great way to finish you, Jane, and thank you so much for sharing your time with us today. We love chatting about emerging markets. It's been a thematic that we've touched on a fair bit this year, and there's no doubt there is serious opportunity for those that can get access and get involved in it. So, you know, it's been a fascinating interview and we appreciate your time. So thank you very much. 

Eu-Jene Teng: [00:38:26] Great. Thanks for your time, guys. 

Bryce: [00:38:29] Hey, thanks for listening to this episode of Equity Mates. We love hearing from you, so drop us a line at contact@equitymates.com or even better, go to your podcast player and leave a five star review. Also, a reminder that the Equity Mates content train doesn't stop when you've run out of episodes to binge. We've got a brand new website, a Facebook discussion group where on Instagram, YouTube and slowly making our way as an influencer on Tik-tok. Well, that's Ren. So come and say hello and join the community. We'd love to welcome you. Until next time.