Asia: Roaring in the year of the tiger

Andrew Dowling:

Well, good afternoon everybody. And thank you for joining us for today's webinar on Fidelity's Asia Strategy. My name's Andrew Dowling and joining me, our portfolio manager, Anthony Srom and investment director, Gary Monaghan. Now Anthony has been managing the Fidelity Asia portfolio since June 2014 and over his seven and a half year tenure supported by Fidelity's investment analysts, he has delivered an annualised return of 16.5% net of fees, which is 6.2% above the index annualised over that time, providing exceptional returns for our clients. What's also attractive for clients is the concentrative nature of the portfolio as well. Anthony very much backs his convictions and the portfolio holdings range from 20 to 35 companies.

Andrew Dowling:

But also with that concentration also comes a very strong focus on risk management with particular emphasis placed on correlation between the individual companies inside the portfolio. And I should also mention that the volatility of the fund has also either been in line with or less than the index over that tenure as well. Now, following an event for 2021 and a volatile start this year, there's naturally lots to talk about including the risks and opportunities to consider across the region. So I'd now like to hand it over to Gary and Anthony, and thank you once again for joining us this afternoon.

Gary Monaghan:

Great. Thank you, Andrew and thank you everyone for joining today. I will ask and answer questions as we go through, but please do feel free to ask questions via the Zoom interface and we'll try and weave those in as we go through. So Anthony, just to kick off, could you please just give us a very quick overview of the approach and really what it is you're trying to achieve with the fund.

Anthony Srom:

Yeah, thanks Gary. In terms of the overview of the process and what you're trying to achieve, basically the process revolves around three variables, being fundamentals, sentiment and valuation for any company that I'm looking at. And essentially the sentiment bucket, if that's chalked up as being negative by the market toward a country, industry or a security that's of interest to me. So what's the market not liking? Why do we have an edge around that? What are the risks that are tolerable, sorry, and does valuation make sense? So if you can tick two to three of those boxes, I think it starts to skew the risk reward in your favour and that follows onto what are you trying to achieve basically relative outperformance to the benchmark.

Gary Monaghan:

And ESG is obviously a very hot topic. It's really making its way into the industry. How does that play a role within this approach?

Anthony Srom:

Basically from two aspects. If I wind back the clock, say four or five years to the beginning of ESG internally, very much it was approached from the perspective of risk. So this is things like government, environmental, what's been the track record of the company, what have they said, what have they delivered versus what they said in previous meetings, et cetera. So for me, it was very much coming at it from a negative aspect i.e The risks and are they digestible and factored into the share price. I think increasingly as the years have gone by particular, I'd say first half of 2021, implicitly, you see some positions in the portfolio have a positive ESG tailwind. So you start to think, well maybe there's a opposite side to the way you've been looking at it historically.

Anthony Srom:

So therefore instead of looking at it as a risk, maybe try and be a bit more explicit in terms of what's the opportunity around ESG for the individual companies that you're looking at. And the example I can point to there is Beijing Oriental Waterproof Company, A-share listed, as the name suggests they do waterproof materials but they're also in the insulation business and when you think about that, helps reduce electricity consumption, carbon footprint, et cetera. But when we were going through the process or I was going through the process myself in first quarter 2021, you kind of weren't thinking about that explicitly. It was just more in the industry structure, the drivers, et cetera, but that is a positive ESG attribute. So from my perspective, how you're looking at ESG now bringing a bit more balance in terms of are there opportunities there for the company that you're looking at, but also keeping it fairly and squarely in the risk category as well.

Gary Monaghan:

Now you're very much a stock picker, so you've got a concentrated portfolio and you've concentrated on the stocks, but external factors do drive sentiment and geopolitics is very much concerning investors right now. Now you don't invest in Ukraine or Russia, but does this have an impact on the portfolio in any way and maybe leading on from that, it sort of seems to have heightened concerns maybe around China and Taiwan, they've come up again. How do you factor this into the portfolio as well?

Anthony Srom:

Yeah, so I think there's a multitude of factors to consider. The obvious ones Russia-Ukraine tensions is oil price. What does that mean in terms of further cost input pressure, macro inflation, et cetera? The portfolio has no oil and gas producers in there. So you think about that in the first instance, what does it mean at the individual security level? You consider the thoughts around inflation, which I'm happy to talk about later on. Thirdly, you just think of what are the opportunities. If you look at what's happened this week, just take a look at the share price that sell. It's a vertically integrated aluminium producer listed in Hong Kong been absolutely smashed. Their cost base is in rubles. Fantastic. They're selling prices in US dollars, fantastic. Is that an investment opportunity? Possibly. So that's, if you think about it, highly negative sentiment, really cheap valuations. Let's look at the fundamentals and size up versus reward, et cetera.

Anthony Srom:

The other aspect would be, you mentioned, Taiwan, so that's kind of the fourth point. The only thing I can really think of there is look, if the US and NATO gets drawn into something in The Ukraine, does that present an opportunity for China to become more aggressive on Taiwan? I don't know. I'm not a military strategist, but kind of seems difficult in my mind to try and fight a war on two fronts or conflicts on two fronts. So that's another kind of X factor that comes into play now. Again, distilling it down to the portfolio, first thing that goes through my mind is, well, how overweight is the portfolio to Taiwan? I think it's few hundred basis points, say, for 300 basis points.

Anthony Srom:

If it goes pear-shaped, I don't think that'll be collateral damage in itself if we're just isolating Taiwan to the portfolio, because you're going to have other significant ramifications out there in the market. But then you look at other stocks that could be huge beneficiaries from that, which would be things like ASML, potentially SK Hynix. So there'll be some swings and roundabouts, but I don't believe the portfolio is taking excessive risks in its current Taiwan positioning.

Gary Monaghan:

Now you just alluded to inflation and of course US rates hikes have also sort of made the headlines. So is either the rate hikes or inflation a problem for Asia and again, how does that impact the portfolio?

Anthony Srom:

I think it's a problem for the world. Asia obviously falls within that. I think there'll potentially be less damage to the Asian region compared to something like the US just given where starting valuations are for the market. But my view, say, going back nine months was that inflation will persist higher and longer than what people are anticipating. That seems to have come through thus far, even if prices as of last month stay flat to September of this year, the US will be comping 5% year over year inflation. Now, if you look at your price, I think we're up circa 30% over the last six months. I think second half still going to have elevated inflation levels. Now is that going to combated by rising rates? I don't think so.

Anthony Srom:

How are you possibly going to... Can you imagine what happens to markets if the Fed pushes for real positive rates? The Fed funds rate would've to go to something like 7-8%. That's just not going to happen, I think. Again, rest of the world, are they going to hike rates as aggressively? I don't think so. So I think we're in a situation where real rates remain negative and therefore what are the other risk factors that potentially come into a play to mitigate inflation? If you're a government, the simple thing is price controls.

Anthony Srom:

I think a lot of people on the call, including myself, I've not lived in a country where, I think, you see the price of fruit, vegetables, whatever fixed. Now, what we've seen in China from time to time is coal prices get out of whack, they fix the coal price. Other prices get out of whack in China, they step on that. I think EDF in France, the utility cut power prices by 20% or 40% last month. So it's already starting. So I would be thinking what's the risk to equities if governments start intervening and fixing prices in products. That's probably a bigger X factor than thinking that the Fed funds rate's going to go to 5, which I think is a very, very low outcome.

Gary Monaghan:

And linking that back to the portfolio though, how are you thinking about this? So you think about companies with pricing power, companies that have potentially sensitive to any interest rate, heights and such?

Anthony Srom:

Yeah. Your ideal company would be something that is not very CapEx intensive, like he says, can at least pass through cost input pressure, if not inflation plus a little bit more. And then that would be something like Kweichow Moutai, for example. You're seeing it in other companies that are in the portfolio they're passing through cost inputs, which is good to see. Is it driving outperformance for the stocks just yet? No, because I think the market's still scared. What's a second degree order out there? Well, weaker companies, like you pointed out, weak balance sheets are going to be hitting the wall and that's happening in China and it's benefiting some of the companies that the portfolio owns. It's just, the benefit is not translating through to the P&L and cashflow just yet because we're in the very early days of that.

Anthony Srom:

So it's just a mental exercise of kind of considering the companies that you have and how are they individually going to deal with things like cost input pressure, rising rates, what's their balance sheet like? And if you look at the portfolio, if it was a stock, a single stock, quality has always been a factor bias and strongly through the balance sheet, if you look at debt to equity. So I feel relatively comfortable from that perspective in terms of rising interest rates and what we're seeing so far on cost input pressure. Gary, I think you're on mute.

Gary Monaghan:

I lost... Sorry. I just want to go into performance before we go into positioning and some more on the outlook. The last 12 months has been pretty strong and it's been a continuation of some strong performance over the last few years. Particularly focusing on the last 12 months, what's been driving this performance and have there been any nice sort of market tailwinds that have been supportive?

Anthony Srom:

Yeah, I think a couple of things come to mind. Is there a slide in there that has the... Yeah, that's the one, if you look on the left hand side, have a look at the kind of green line industry and country, the aqua coloured line. So what I'd say is a couple of things come to mind. One is stock picking, two is related to that, but also knowing what not to own last year, I think was important. And if you look at the fund in aggregate, it was underweight, let's say the communication services and consumer discretionary part of tech. So think of the China tech companies like Tencent, Alibaba, JD, Pinduoduo in aggregate. Unfortunately it did own Alibaba for a decent part of last year, but as a whole, it was underweight, that particular part of the market and that's what's showing up in those two lines there.

Anthony Srom:

So I think, one, knowing what not to own was what was beneficial last year, two, stock picking came through, things like Kakao, ASML. And I think as we look at second half of last year, you started to see... Especially fourth quarter last year, you started to see a pretty strong skew in market positioning towards value and away from growth. But the funds seemed to have posted respectable numbers in the fourth quarter of last year and again, that was kind of due to idiosyncratic stock selection. So some of the unloved securities that were held in the portfolio, like Focus Media caught a bid. I wouldn't say that was fairly and squarely in the value bucket, but that Beijing Oriental Yuhong came back very strongly in fourth quarter. So I think last year's performance was a couple of things. One, the stock picking, but also generally avoiding parts of the market that were hit quite badly. So I think positive attributes came through from Tencent, Meituan et cetera, et cetera and a bit of underperformance from Alibaba.

Gary Monaghan:

Sticking with Alibaba, because it was bought in November 2020, as you said, it was a key detractor at stock level, although offset by underweights in other areas of the industry. Now it's out of the fund. So what's been the coroners verdict from this position?

Anthony Srom:

Yeah. Well now it's an obvious thesis break. It's harder to kind of ascertain as you're going through the process, but kind of July, August last year, I started to formulate the view that it's not going in the right direction. You're not getting confirming sentiment signals, which is one of the first things you look at. Valuation is getting cheaper at the margin. People are telling you, that's okay, it'll wash out. And those kind of things are warning signs for me. So you're kind of sitting at your desk in July, August, just running through the model sensitivity analysis and I was formulating a view that there's potentially 30% more downside. I think the stock then was circa $140-$150 a share and that 30% could come through pure earnings cuts, multiple compression or a combination of both.

Anthony Srom:

And then you fast forward into September and the company starts guiding down third quarter numbers by about five percent. Stock falls eight and that to me was the icing on the cake that its totally broken. And the fund exited rapidly thereafter and it's continued to underperform since then. When I look back, I think there's a few things that goes through my mind. One was, the regulatory crackdown was more broader than initially anticipated. That then kind of fed into that assessment I was formulating in July, August, you get the earnings downgrade. The third point would be going into the position you kind of thought the first year would be a wash. I think that was kind of a bit of a mistake giving yourself one year. If I had to do it all over again, you'd have preferred to have exited earlier, but I think the numbers we chose, it's been the right call to exit when we did because you've generated alpha being underweight since then. But when I look back and kind of criticise myself as what went wrong there, there's some of the factors that come through.

Gary Monaghan:

So with that in mind though, and as you said, they've sort of continued to underperform, well, Alibaba, in particular has continued to underperform. Is there a point where you could be buying back in and that you think that the long term structural opportunity in companies like Tencent, Ali, remains and they're cheap enough to buy into?

Anthony Srom:

Yeah. The fund still owns Tencent. We are looking at Tencent. It's just really at the level where you'd pull the trigger to buy. I think if you look at other companies like Kweichow, Meituan I seriously have questions around their longevity and business models, for example. Same thing with Pinduoduo. Alibaba, I think is more impaired than, say, we were six months ago. So even though it's circa 110, no real interest just yet. But yeah, we'll keep a watching brief on it. But the one kind of that looks pretty more interesting out of the bunch is Tencent. But again, just cognizant of some of the risks around that and as I mentioned, if valuation's right, we'll step up to the plate, but it really is.

Gary Monaghan:

Moving on to positioning, the IT sector continues to be the biggest overweight in the portfolio. However, this does seem to be some concerns continuing around the semiconductor cycle. So where are you invested in the technology space and why?

Anthony Srom:

Yeah, I think that... There are names that come to mind, things like MediaTek, SK Hynix, TSMC, ASML. So if I look at it, Hangzhou Hikvision would fall into that, but TSMC circa 10% of the NAV, ASML circa 5, they're probably the two most important. In terms of the positioning, you're clearly more upstream. So in the foundry space and equipment providers to the foundry company. So that's ASML, which is basically a monopoly for all intents and purposes. So that's kind of where the fund is positioned. I just think if you look at the long term drivers, they're still attractive. The thesis is in play. This is things like AI cloud servers, Web3.0, metaverse. All this kind of stuff is going to require a lot of compute power, leading node technology that's fairly and squarely up TSMC and ASML's alley.

Anthony Srom:

Around that, there's a cycle of... The foundry was exceptionally tight post COVID, it's easing a little bit, but trying to distinguish cyclical from where's the cycle, sorry, distinguish the structural from where are we in the cycle and therefore your opportunity around buying and selling these companies and I still think they're long term relative outperformers. If you look at other companies such as SK Hynix and MediaTek again, SK Hynix, similar thesis in that I think DRAM demand, yes, the cycles are getting lower troughs. There's more discipline in terms of CapEx and I think kind of the market[inaudible 00:21:47]look through this short cycle that we've had and the portfolio bought SK Hynix in first quarter '20, when the stock price was kind of very much close to the trough and happy with that one. The thesis is still intact though. We look like we're exiting a shallower cycle.

Anthony Srom:

MediaTek is a little bit different. They're more kind of smartphone related, Wi-Fi, 5G, internet of things. So they more of a chip producer, not a memory producer, but again, if you look at what management's done over the last couple of years, they've really focused on, on R&D price value relationship. We believe their leading edge chips are a better proposition than Qualcomm. They're taking share in the high end 5G market in China but the big opportunity is in the emerging markets. As phone technology gets upgraded, the volume growth should be quite strong. So it's volume growth plus market share gain, plus ASP uplift and you've got the other peripheral drivers there that I discussed, but bearing in mind that SK Hynix and MediaTek, I'd say, somewhat too more cyclical than something like ASML and TSMC. I'm just try and be mindful of that.

Gary Monaghan:

Now you just mentioned the structural opportunity that these businesses have, particularly in foundry and memory, so what's stopping competition coming in? Chinese players, maybe other US players coming in and maybe trying to take some of that lunch?

Anthony Srom:

[inaudible 00:23:28]pure and simple. The Chinese, they've been throwing so much money at the semiconductor space, but once you are very far behind on node migration and trying to get the cadence right, it's going to be one hell of a task to try and overtake someone like TSMC and I think there's the very, very low chance that they get anything close to ASML. So my view and what we pick up in the industry, China's probably 10 to 20 years behind. So something they'll work away on, but more on the lagging edge nodes.

Gary Monaghan:

Picking up on another overweight which is increased in the last sort of six months or so and that's materials, is this really a plan commodity prices?

Anthony Srom:

No, no. The fund and the strategy doesn't kind of take explicit views on commodities or currencies or whatever, that's very much at the individual security level. So that's what'll say about that.

Gary Monaghan:

So within the material space, where are you invested? I think Yuhong may be classified as a materials company. Is that the only one?

Anthony Srom:

Yuhong is there. I'm just trying to think what else, I'm just looking through what was bought... Know Skshu Paint in China? And I think the fund has brought around 250 basis points of that in the last three, four months. Plus also I think the sector positioning that you're seeing have increased in materials, don't forget the stock prices particularly Beijing Oriental Yuhong which is a top five is up about 25%. So I think part of that increase in sector positioning would be relative outperformance and you can compliment that with Skshu, which is a purely a paints manufacturer in China.

Gary Monaghan:

So if we think about Yuhong and Skshu Paint, which are both building materials providers, basically, to the property sector, how have these fared out and how's your view changed on these, given all of the news in China property and in fact, have you been buying into or interested in the China property developers?

Anthony Srom:

Now interested in the developers. It's more the second derivative exposure, so the names that you pointed out. And when we look at both of those companies, they operate in two different areas of the market. A couple of things go through my mind. One, both companies have gone through a bit of accounts receivable shake out in the last six months, looks like we're getting to the tail end of that. Two, as I mentioned earlier in the call, competitors for both of these companies are hitting the wall, which is a good long term industry structural positive in my mind and versus the developers, the developers are kind of facing, I think, a much bigger demographic headwind than the materials providers. Because don't forget, in China, I think, you're going to get much more of a refurbishment market, which will offset a lot of that demographic headwind.

Anthony Srom:

So the way we are seeing these two kind of companies is continual market share gain that's obviously going to be complimented by exits from the industry. They've been able to pass through cost price pressure and when you put those through the wash, it'll more than offset, I think, the demographic headwind that the property developers are going to be facing in the next, say, two to three years.

Gary Monaghan:

If we also just go through the sector positioning there's no healthcare there. I'm just wondering if you started to look at healthcare names, particularly in China, given names like WuXi Biologics being added to the unverified list and the subsequent to the downgrading stock.

Anthony Srom:

No, I still think they're just way too expensive.

Gary Monaghan:

Simple answer. On the financial space as well, that's the biggest underweight position, if we do get interest rate hikes, are you tempted to buy in into them because maybe it could be good for the names of the banks or where else are you invested in the financial space?

Anthony Srom:

No, I think that's been more of the story second half of last year where... And again, when I say second of half of last year, more concentrating on the fourth quarter where the market was very interested to buy rising rate beneficiaries, so value stocks, banks, et cetera. If we go back to kind of the earlier comments in the meeting, I don't think doing the leverage in the system, you can raise rates as much as they need to go. So there's a cap there. So I kind of didn't buy into that view.

Anthony Srom:

And I think what's happened subsequently is that the yield curve started to flatten, so the gas is, I think, coming out of this trade that other people may have put on last year. The Chinese banks have caught a little bit of a bid on monetary easing in China but again, I think they're kind of low quality companies, long term underperformers. It's not something that is of interest to me right now. So if we flip it around a little bit the funders have got a longstanding. You're asking, where is the position in financials? AIA remains in the portfolio, HDFC Bank remains in the portfolio and I think if we look at those two combined, it's pretty circa 10% and that's about it. And they held on for kind of individual reasons. But if I consider those two, I'd be more likely to sell AIA than HDFC bank going forward. So that's my thoughts on financials.

Gary Monaghan:

I just want to move on to some of the country positioning. You've touched on a number of stocks, particularly sort of China and Taiwan, but obviously as you can see on the chart on the right hand side, what stands out is no ASEAN still, what is the reason for continuing to stay away from ASEAN? Do you think there's opportunities emerging as the borders open up in the coming months?

Anthony Srom:

Fundamentally, you look at companies in ASEAN, but ideally what you're looking for is long term structural winners and quality companies in there, kind of few and far between, and some of them kind of tick that bucket, but then liquidity is an issue i.e is the stock price low enough, long enough to build a position and then the other thought is, well, can you even get out of that position? So we have looked, the fund has been invested in ASEAN in the past like Bank Rakyat in Indonesia, LC Group in the Philippines. More recently, we were very close to entering a position in ACEs Hardware in Indonesia. They are markets that you look at, but just haven't pulled the trigger on anything there for the last couple of years, so it's just the way it is at the moment.

Anthony Srom:

In terms of your question on the economies and the rebounds and... Look, I think last year, ASEAN caught a bid on the back of stresses in North Asian market, there was a rotation. People were buying it on the assumption that vaccination rates are going up, commodity prices are going up. I could see the rally, but as of today there's kind of nothing imminent or on the radar.

Gary Monaghan:

If we look at India, obviously it's one of the bigger underweights and it has been for some time, is it just still too expensive to invest in right now and how far do you feel it needs to fall before it becomes attractive to you?

Anthony Srom:

Yeah, it's... The stocks that you like have really elevated valuations and you kind of started doing work on it first half of last year when India had the wave, but the market dip was very shallow and then powered onto new high. So you've got some companies in mind. How far would the market fall? I don't really care. It's just how far would that company fall? As of today, I mean, we've done the work on it, to be frank 30%. So that's a hell of a long way to go down. Can it go down? Well, if oil goes to 150 and inflation goes up, it's a clear possibility, and I'd be very interested. But where do you see more ideas it'd be something like... There'll be something like China where we've got a couple of ideas we're working on, and that's about it.

Gary Monaghan:

Just want to dig into maybe some of the positions, what we can see here at the top, active positions in the portfolio. And there's only 25 stocks in the portfolio as well, so you've got 10 of the 15 here and we've touched on many of them. But maybe if we go into Focus Media, who you touched on earlier, they weren't in the portfolio a year ago, it's now top four position. What's the thesis there and I suppose the timeline as we've gone through and adding that holding?

Anthony Srom:

Yeah, I think the first half of last year was a relative underperformer, came back quite strongly in the second half and very happy with the fund positioning and the fundamentals of the company. So just explaining that one, what got me interested in first quarter of last year was the regulatory crackdowns that you see. The first shot was the online education providers in China and in aggregate, those guys were about 5% of Focus Media's revenue. So Focus Media, just to back up the track a little bit, is basically a digital display advertiser. So I think, LED or LCD screens in hotel lobbies, office lobbies, lifts, cinema advertising, et cetera. So that got smashed about 20% on the back of a 5% notional revenue wipe out.

Anthony Srom:

And these were kind of the regulatory crackdown broadened deep into kind of tech and property et cetera and this got caught up in the negative sentiment and kind of, from memory, the stock price beginning of last year was maybe circa ¥13-¥14 went down to circa 7. You're buying into that relative weakness on the view that it's kind of being mispriced. And as we go through the year, you just track the quarterly earnings releases and the revenue damage is not as bad. The earnings damage is not as bad. So it's kind of meeting to slightly exceeding consensus expectations. The underlying quality of the business is improving because they're less reliant on bigger customers. So what I'm saying is they've of spread their customer base much more, higher quality, providing better services at higher ASP, and the earnings are coming through. The market just didn't care about it until fourth quarter of last year and it popped quite substantially.

Anthony Srom:

So when I look at Focus Media, I still think it's quite undervalued. The fundamentals are tracking along nicely. And I think when things open up more in China, I think advertising will be a beneficiary. So a lot of... All of the clients today are from Australia. Look at Nine Entertainment and the media companies in Australia, they've kind of... Advertising's rebounded back strongly. I think Australia's opened up more than China has. So I think as we're going to this year, the fundamentals of the business, I think, have improved, sentiments turn somewhat, but not excessively positive even the stock's still good value.

Gary Monaghan:

So we go down that list a little bit, Techtronic, which is a name that was added, I recall almost nearly two years ago when COVID first hit, it's been a great performer, but still a big position in the portfolio. Are you concerned about valuation or is it just such a high quality business that you want to continue holding?

Anthony Srom:

I think the stock prices has pretty indicated that it maybe ran a little bit ahead of itself, but I think underlying that is the market's fear of rising rates, dampening US housing demand. And Techtronic basically manufactures power tools for do-it-yourselfers right up to contractors who need high end equipment. A similar situation over, again, Australian clients, you've got James Hardie, it's pretty peeled off from 55 to mid 40s, I think part that is again, similarly what's driving Techtronic lower. Our view is the market economists read the situation on US housing.

Anthony Srom:

I think there's a lot of pent-up demand which isn't really going to go away if the Fed tightens 150 basis points. I think the other concern for Techtronic is just supply chain issues, which is not unique and you've had recent results from Stanley Black & Decker, et cetera and the stock price's fallen. These guys report in about a week or two. We'll see. In my mind, this is kind of shorter term noise and potentially a buying opportunity. But no, I think it's still looking like a relative long term outperform in my mind.

Gary Monaghan:

And then the sort of number 10 in the list, Hangzhou Hikvision, as on the 3rd of June, it's going to be formally added to the US entity list. So what actions will you be taking there?

Anthony Srom:

I'd say the actions have already been occurring. This entity list inclusion's been pushed out. And I think if we look at 2021 the stock price had two very steep rallies, I think during first quarter and midyear. I think high 50s into the 60s in the fund to get big chunks of the position there. Whereas in a similar situation, okay, the clock is still ticking, but the thesis is still intact. Just as before, you'll look to exit at more opportune times rather than just exit because there's a deadline at 3 June.

Gary Monaghan:

And then final one for me, Anthony is just on the underweights. We talked earlier about the technology sector and the structural opportunities there, but you don't own one of the big names in Samsung Electronics. Why is that?

Anthony Srom:

Because the fund owns SK Hynix. Both of them the key driver is memory. And again, if we go back to first quarter 2020, again, both companies got hit and you're just weighing up exactly what you asked, do you buy Samsung or do you buy SK Hynix? And if you want pure play exposure to memory, you go for Hynix. I didn't want the baggage of consumer electronics and other bits and pieces that Samsung's got. I mean, you got foundry through TSMC. I'm not saying that's baggage, but it's not as good quality as TSMC and so therefore we went for the pure play because it stacked up again on its own risk/reward merit.

Gary Monaghan:

Excellent. Thank you. And thanks for all your thoughts there, Anthony, and maybe Andrew I'll pass over to you to see out.

Andrew Dowling:

Well, yeah. Thank you. Certainly, Anthony and Gary, and on behalf of Gary, Anthony, myself, and the Fidelity team, I'd just like to say, thank you for those who've joined us online today. If you do have any follow up questions, do let us know. There will be a request at the conclusion of today's presentation for your feedback. We do value that, of course. So please do let us know your thoughts or any other ideas you have with regards to input you'd like to receive with these webinars. The CPD points available for today, so we'll send those out accordingly. Enjoy the rest of your week, and we'll look forward to seeing you again soon. Thank you.