Welcome to the Fearing Greed Business Interview. I'm sure nayelma. As the year draws to a close, we start looking ahead to the opportunities for investors in twenty twenty five. Morning Star has released its twenty twenty five Outlook and assessment of the economy and market right across the globe. Bad news for local investors. The Australian market ranks as one of the least favorable for investor opportunities. So where should we be looking instead? Today we're going through morning Stars picks for the best growth potential over the coming decade. Remember this is general information only and you should always seek professional advice before making investment decisions. Matt Waicher is the Chief Investment Officer Asia Pacific at morning Star. Matt, welcome back to Fearing Greed.

Welcome to the Fearing Greed Business Interview. I'm sure nayelma. As the year draws to a close, we start looking ahead to the opportunities for investors in twenty twenty five. Morning Star has released its twenty twenty five Outlook and assessment of the economy and market right across the globe. Bad news for local investors. The Australian market ranks as one of the least favorable for investor opportunities. So where should we be looking instead? Today we're going through morning Stars picks for the best growth potential over the coming decade. Remember this is general information only and you should always seek professional advice before making investment decisions. Matt Waicher is the Chief Investment Officer Asia Pacific at morning Star. Matt, welcome back to Fearing Greed.

Thanks lot for having me again.

Thanks lot for having me again.

Sean, let's jump into it. But well, actually, why is Australia solo? First off, Well, I think it's not that it's in absolute sense. We don't think you're going to be losing money by investing industry.

Sean, let's jump into it. But well, actually, why is Australia solo? First off, Well, I think it's not that it's in absolute sense. We don't think you're going to be losing money by investing industry.

When you think that there's probably a few better opportunities for generating you know, higher long term returns in some of the other other regions out there, I mean US. The US market's probably in the same boat some parts of the market here, both here and in the US. So you know, the valuations have got a little bit rich. Doesn't mean we don't want to invest there, but we think we can push a little bit overweight in some other areas.

When you think that there's probably a few better opportunities for generating you know, higher long term returns in some of the other other regions out there, I mean US. The US market's probably in the same boat some parts of the market here, both here and in the US. So you know, the valuations have got a little bit rich. Doesn't mean we don't want to invest there, but we think we can push a little bit overweight in some other areas.

Okay, let's start China. The road remains bumpy, structural issues, etc. Why do you like China?

Okay, let's start China. The road remains bumpy, structural issues, etc. Why do you like China?

We like China, And again it's you know, as you say, structural issues, bumpy road, tariffs on the horizon, geopolitical issues. It's made China very cheap or as particular, parts of the market very cheap. And yeah, we're not going to be diving into Chinese property stocks, but we do like some of the some of the large cap tech names you know, you know who you're investing alongside very high quality businesses, lots of cash on the balance sheet, can undertake buybacks and can control costs very well, and all at very low valuations. So I guess the way and probably a few of the opportunities we talk about today, the way that we think about investing is not so much that we need an asset like Chinese equities to go from being terrible to fantastic. We just need to go them to go from looking you know, terrible from a sentiment perspective to looking okay. And we think we can generate some pretty good returns out of China by that happening and a few other opportunities. But you know, we think that the economy there is seems to be bottoming out a little bit, and I think, you know, stimulus is certainly coming, has come, and we think that they're on that path. They know that they do need to stimulate how quickly that comes. You know, we're a little bit indifferent too, because we think we're getting some of the assets really cheap valuations. A stock like Ali barber or ten cent Ali Barbera in particular, you know, not not much has to go right for that, and it's because it's only trading on forward pe of nine times, which is pretty good value in this kind of market globally.

We like China, And again it's you know, as you say, structural issues, bumpy road, tariffs on the horizon, geopolitical issues. It's made China very cheap or as particular, parts of the market very cheap. And yeah, we're not going to be diving into Chinese property stocks, but we do like some of the some of the large cap tech names you know, you know who you're investing alongside very high quality businesses, lots of cash on the balance sheet, can undertake buybacks and can control costs very well, and all at very low valuations. So I guess the way and probably a few of the opportunities we talk about today, the way that we think about investing is not so much that we need an asset like Chinese equities to go from being terrible to fantastic. We just need to go them to go from looking you know, terrible from a sentiment perspective to looking okay. And we think we can generate some pretty good returns out of China by that happening and a few other opportunities. But you know, we think that the economy there is seems to be bottoming out a little bit, and I think, you know, stimulus is certainly coming, has come, and we think that they're on that path. They know that they do need to stimulate how quickly that comes. You know, we're a little bit indifferent too, because we think we're getting some of the assets really cheap valuations. A stock like Ali barber or ten cent Ali Barbera in particular, you know, not not much has to go right for that, and it's because it's only trading on forward pe of nine times, which is pretty good value in this kind of market globally.

Yeah, so consumer discretionary stocks generally in China, Oh.

Yeah, so consumer discretionary stocks generally in China, Oh.

Yeah, consumer discretionary it where there's high quality. Yeah, slash tech is really you know, those they're very high quality businesses, you know, I mean, apart from the fact that they're in China very comparable to the US tech companies in what they do, and you know the quality of the business.

Yeah, consumer discretionary it where there's high quality. Yeah, slash tech is really you know, those they're very high quality businesses, you know, I mean, apart from the fact that they're in China very comparable to the US tech companies in what they do, and you know the quality of the business.

Okay, Another country you picked out, which admittedly was more than a week ago I think when you did the research, was Korea. Now, plenty went on in Korea last week, but Samsung an incredible company over many years. Do you think that's a good pick. Just explain that one, and particularly you know how you think about sovereign risk.

Okay, Another country you picked out, which admittedly was more than a week ago I think when you did the research, was Korea. Now, plenty went on in Korea last week, but Samsung an incredible company over many years. Do you think that's a good pick. Just explain that one, and particularly you know how you think about sovereign risk.

Yeah, and I mean China as well. Lots of sovereign risks there. It's all so we'll do with the sovereign risk first. You know, there's lots of things that we can't control in any investment. We couldn't control who was going to win the US election. Similarly, we can't control that. These are things that are potentially knowable. But you know, really we manage that in the sizing of the positions in our portfolio. We don't want to take too much risk with our client's capital, but we do want to, we do. Investing is all about taking some risk, and so we want to really make sure that the valuations are compelling enough when we're going to take on that sovereign risk as well. So there you know, obviously a few issues last week in Korea, and we think over the longer term they'll be sorted out and things will normalize. That that's the base case. You know, there's always a margin of error there, and but the probabilities are over the longer term they'll normalize. Now, when you can combine that normalization of things in the macro or the geopolitical with a really compelling valuation opportunity like Samsung, we think the really interesting opportunity at this point in time, then we think we've got a compelling kind of investment on our hands, and so you get gain. It's really valuation driven. We think, you know, memory prices are bottoming out, supporting you know, really a profit margin recovery for a stock like Samsung, and it's a leading global memory supplier and in our view it's trading at one time's price to book, but it's been really penalized because of the competition around you advanced memory chips for AI and any progress on catching up in that sector, which we think, you know, a good company like Samsung can do is going to be a real valuation rerating. And so that's kind of the thesis. But we see you know, given what's happened to Samsung, given some of the geopolitical issues we see, Samsung really from this point offers a really asymmetric upside versus limited downside.

Yeah, and I mean China as well. Lots of sovereign risks there. It's all so we'll do with the sovereign risk first. You know, there's lots of things that we can't control in any investment. We couldn't control who was going to win the US election. Similarly, we can't control that. These are things that are potentially knowable. But you know, really we manage that in the sizing of the positions in our portfolio. We don't want to take too much risk with our client's capital, but we do want to, we do. Investing is all about taking some risk, and so we want to really make sure that the valuations are compelling enough when we're going to take on that sovereign risk as well. So there you know, obviously a few issues last week in Korea, and we think over the longer term they'll be sorted out and things will normalize. That that's the base case. You know, there's always a margin of error there, and but the probabilities are over the longer term they'll normalize. Now, when you can combine that normalization of things in the macro or the geopolitical with a really compelling valuation opportunity like Samsung, we think the really interesting opportunity at this point in time, then we think we've got a compelling kind of investment on our hands, and so you get gain. It's really valuation driven. We think, you know, memory prices are bottoming out, supporting you know, really a profit margin recovery for a stock like Samsung, and it's a leading global memory supplier and in our view it's trading at one time's price to book, but it's been really penalized because of the competition around you advanced memory chips for AI and any progress on catching up in that sector, which we think, you know, a good company like Samsung can do is going to be a real valuation rerating. And so that's kind of the thesis. But we see you know, given what's happened to Samsung, given some of the geopolitical issues we see, Samsung really from this point offers a really asymmetric upside versus limited downside.

From here, just before we leave emerging markets, Latin America and Mexico, Brazil, those sorts of countries, what's attractive about them?

From here, just before we leave emerging markets, Latin America and Mexico, Brazil, those sorts of countries, what's attractive about them?

Well, again, there's there's some really high quality parts of the market there. You know, some very high quality banks in Brazil and Mexico, very high quality consumer staples companies in Mexico that do great business. I think that both those markets have been penalized for having leftist governments from a market's perspective. You know, this is kind of anecdotal bit, but certainly, you know, there've been the baby's been thrown out a little bit out with the bath water over the last six to eighteen months, and we think, you know, as things normalize, as you know, some of the heat of the Trump tariff negotiations come out of the market for Mexico and we see that actually things are going to be okay, and it's certainly okay relative to other markets. That again that these countries can re rate and do pretty well. But you know, we don't want to have all our eggs in the emerging markets baskets. There there's other opportunities out there.

Well, again, there's there's some really high quality parts of the market there. You know, some very high quality banks in Brazil and Mexico, very high quality consumer staples companies in Mexico that do great business. I think that both those markets have been penalized for having leftist governments from a market's perspective. You know, this is kind of anecdotal bit, but certainly, you know, there've been the baby's been thrown out a little bit out with the bath water over the last six to eighteen months, and we think, you know, as things normalize, as you know, some of the heat of the Trump tariff negotiations come out of the market for Mexico and we see that actually things are going to be okay, and it's certainly okay relative to other markets. That again that these countries can re rate and do pretty well. But you know, we don't want to have all our eggs in the emerging markets baskets. There there's other opportunities out there.

Okay, So that's the emerging companies. In a moment, we'll be back with Matt Waicher, chief investment Officer of Asia Pacificate morning Star, to talk about Europe and AI investing. Okay, so let's jump into Europe then of the developed market. So I'm sure some of those big economies in Europe, and we're going to include the UK in that they've they've been belted more than many other markets. Well, I mean, we're a bounce in Europe and included UK and Europe.

Okay, So that's the emerging companies. In a moment, we'll be back with Matt Waicher, chief investment Officer of Asia Pacificate morning Star, to talk about Europe and AI investing. Okay, so let's jump into Europe then of the developed market. So I'm sure some of those big economies in Europe, and we're going to include the UK in that they've they've been belted more than many other markets. Well, I mean, we're a bounce in Europe and included UK and Europe.

Do you like we? I mean, the UK is a really interesting one. It's got some interesting tailwinds at this point in time in aggregate as a market, we think that, you know, macro, it's got a few macro tailwinds coming through. Rates are coming down, inflations kind of under control. The you know, like everywhere, it's had a little bit of a blip here and there, but certainly come down a lot and the economy is not looking too bad there now. So you know, if you dig down into into the UK, there's a few home builders you know, the home building sectors are really interesting ones, some very cheap assets, some what we call four or five star stop from our morning So equity research team that are going to take advantage of those macrotail winds and be able to do very well. You know, it's much more cyclical play there in Europe more generally, I think that that there's been you know, if we look at the sectors there, you know, all of Europe has been beaten up a little bit over the last few years, over the last ten years in fact, and certainly relative to the US. But there's still some high quality companies. And one of the areas that we think there's a few good stocks is probably in the auto makers, you know, the Daimler's, the BMW's, et cetera. Where you know, again with competition from China certainly coming into the market, we think that the valuations that you can own some of these car companies that are all very high quality businesses or be it a bit cyclical, we think that they can do you know, pretty well over the over the medium to long term horizon.

Do you like we? I mean, the UK is a really interesting one. It's got some interesting tailwinds at this point in time in aggregate as a market, we think that, you know, macro, it's got a few macro tailwinds coming through. Rates are coming down, inflations kind of under control. The you know, like everywhere, it's had a little bit of a blip here and there, but certainly come down a lot and the economy is not looking too bad there now. So you know, if you dig down into into the UK, there's a few home builders you know, the home building sectors are really interesting ones, some very cheap assets, some what we call four or five star stop from our morning So equity research team that are going to take advantage of those macrotail winds and be able to do very well. You know, it's much more cyclical play there in Europe more generally, I think that that there's been you know, if we look at the sectors there, you know, all of Europe has been beaten up a little bit over the last few years, over the last ten years in fact, and certainly relative to the US. But there's still some high quality companies. And one of the areas that we think there's a few good stocks is probably in the auto makers, you know, the Daimler's, the BMW's, et cetera. Where you know, again with competition from China certainly coming into the market, we think that the valuations that you can own some of these car companies that are all very high quality businesses or be it a bit cyclical, we think that they can do you know, pretty well over the over the medium to long term horizon.

Another thing that you talk about in the report is AI investing, and obviously most investors think about AI and would like to jump on the bandwagon, notwithstanding probably in videos about the only company that seems to be making a lot of money out of it at the moment. How do you invest in AI?

Another thing that you talk about in the report is AI investing, and obviously most investors think about AI and would like to jump on the bandwagon, notwithstanding probably in videos about the only company that seems to be making a lot of money out of it at the moment. How do you invest in AI?

Well, yeah, this is the trickiest question, and yeah, I guess how you invest in it would have been investing in Navidia three or four years ago, and hindsight's twenty twenty. Hindsight, it's a very easy thing to do. But I guess you know, really what we're looking to do now is go Okay, Well, the Navidias of the world, the enablers of the AI, even some of the big tech names that have got the data warehouses and those sorts of things. You know, they've started to enable other companies to take advantage of this and on the revenue side, but also the productivity and cost cutting side, the efficiency side as well, and so that's where we're looking for opportunities. And it's not so even so we still like a company like Microsoft that that you know, has a big cloud business that can enable AI as well. But you know there's companies like service Now, which is a really even in our company of mornings, we use service Now. It's really enables end digitalization of workflows and those sorts of things. It's a really interesting company and that it can generate a lot of revenue from helping other companies become much more efficient. And so that's a company that's very interesting in the AI space and companies like it. And then on the other I mean even consumer staple stocks such as Walmart or retailers or consultants can take advantage of those sorts of companies like Service Now to make their businesses much much more efficient. I think that's the next wave of what we're going to see. I think, well, you know, the enablers than the videos, etc. It's not to say that they're not going to do well, but it's kind of like the high jump. Even the best high jumpers knock off the bar at some stage it just gets too high, and we're probably approaching that for some of those big tech names, but there's certainly lots of other stocks that can get over the bar when it's a bit lower.

Well, yeah, this is the trickiest question, and yeah, I guess how you invest in it would have been investing in Navidia three or four years ago, and hindsight's twenty twenty. Hindsight, it's a very easy thing to do. But I guess you know, really what we're looking to do now is go Okay, Well, the Navidias of the world, the enablers of the AI, even some of the big tech names that have got the data warehouses and those sorts of things. You know, they've started to enable other companies to take advantage of this and on the revenue side, but also the productivity and cost cutting side, the efficiency side as well, and so that's where we're looking for opportunities. And it's not so even so we still like a company like Microsoft that that you know, has a big cloud business that can enable AI as well. But you know there's companies like service Now, which is a really even in our company of mornings, we use service Now. It's really enables end digitalization of workflows and those sorts of things. It's a really interesting company and that it can generate a lot of revenue from helping other companies become much more efficient. And so that's a company that's very interesting in the AI space and companies like it. And then on the other I mean even consumer staple stocks such as Walmart or retailers or consultants can take advantage of those sorts of companies like Service Now to make their businesses much much more efficient. I think that's the next wave of what we're going to see. I think, well, you know, the enablers than the videos, etc. It's not to say that they're not going to do well, but it's kind of like the high jump. Even the best high jumpers knock off the bar at some stage it just gets too high, and we're probably approaching that for some of those big tech names, but there's certainly lots of other stocks that can get over the bar when it's a bit lower.

Matt, thank you for talking to Fearing Green.

Matt, thank you for talking to Fearing Green.

Thanks love for having me.

Thanks love for having me.

That was Matt Waycher, Chief Investment Officer Asia Pacific at Morning Star. This is the Fear and Greed Business Interview. Remember this is general information only, and you should seek professional advice before making investment decisions. Join us every morning for the full episode of Fear and Greed. Daily business news for people who make their own decisions. I'm chanee elma Enjoy your day.

That was Matt Waycher, Chief Investment Officer Asia Pacific at Morning Star. This is the Fear and Greed Business Interview. Remember this is general information only, and you should seek professional advice before making investment decisions. Join us every morning for the full episode of Fear and Greed. Daily business news for people who make their own decisions. I'm chanee elma Enjoy your day.