Energy Transition and Geopolitics in Global Markets

so when we change our Energy System we have to ask where the energy comes from and who's actually leading in in terms of producing the new equipment we need to harness that uh source of energy and I think if you look around the world today the answer who is leading the energy transition in business terms is fundamentally obvious it's China China is uh you know the leading producer of renewable energy equipment on which companies and governments spend money to implement uh the energy transition as it were uh and they were also leading in areas like Mobility you know with electric vehicles so it's pretty clear that geopolitics is going to loom large when you have to do this transition hello everybody this is Pascal from neutrality studies and today I'm talking to Dr Kingsley Jones who is a founding partner and CIO for Chev Global an australian-based investment firm before running his own company Dr Jones has been serving for many years as a PO portfolio manager and the head for quantitative trading research units in various other firms in short Dr Jones is a professional analyst and one who pays a lot of attention to geopolitical impacts on global markets today we want to discuss something that has been flying somewhat under the radar and that he pointed out to me namely the Nexus between this fundamental shifts that we are seeing at the moment on the one hand an energy transition away from fossil fuels and on the other hand a power transition uh in international geopolitics away from you know the Western centered liberal capitalism if that's the right thing to call it but we want to bring that together today uh Dr Jo Jones thank you for joining me today oh it's an absolute pleasure to be here Pascal I'm very much enjoy watching your videos at neutrality study so uh you know it's great to meet you in person and have a good chat it's great talking to you because the there's not many analysts who try to use geopolitics in markets although of course everybody has to use it a little bit but I think for you it's your bread and butter um as you've been telling me before before the the chat a bit that you try to look at the the large picture also for long-term investment and you know it needs to be very concrete though right because you do you do actual investment so um why do you think that this has been underappreciated that we are also seeing energy transition happening um while the the geopolitical system is changing yeah look that's a really really great Rabbit Hole to go down we think because energy transition is accepted we're moving from fossil fuels uh we need new sources of energy whether it's renewable energy like solar and wind and tidal and hydro and other things or or it's uh you know perhaps it's nuclear at the margin or or even some new ideas that have yet to really be progressed so the energy transition is a big thing it's accepted so it's a valid question why on Earth would that relate to geopolitics and the fact that we're seeing all this geopolitical change right now you know is we can't think really about causes but is there a reason why these two things are related and from an investment perspective I very much think that the answer to that is yes uh that these two things are related and they are so for a very very simple economic reason when you have the energy system remember that powers our machines we as humans we we need food for our labor but for any sort of machines whether it's a you know a tractor or a car or a factory uh they need energy and indeed data warehouses need energy also as we're seeing with AI so when we change our Energy System we have to ask where the energy comes from and who's actually leading in terms of producing the new equipment we need to harness that uh source of energy and I think if you look around the world today the answer who is leading the energy transition in business terms is fundamentally obvious it's China China is uh you know the leading producer of renewable energy equipment on which companies and governments spend money to implement uh the energy transition as it were uh and they were also leading in areas like Mobility you know with electric vehicles so it's pretty clear that geopolitics is going to loom large when you have to do this transition and there's you know the new kit on the Block very old country resurgent as an economy China thinking about the world in different ways doing business in different ways having a different form of government and being the supplier of this new form of energy uh at scale and that's a huge Challenge and that's why we see the energy and power transition as being related you know it's been interesting to me that the the Biden Administration but even before him uh the Trump Administration in the US in general is very keen on projecting this image that if we if we just cut China well enough off Western markets especially in uh high technology in in microchip uh uh uh technology which is fundamentally liography technology it's not the chips it's the the machines that make the chips that you that that they're trying to restrict to them then problem will be solved you know China won't be able to rise any further but now you're saying that's not even it it's the it's the energy dummy yeah we would say that I mean we'll have a a a think about what you raised there with chips in a moment but yeah look it's the energy dummy because uh you know otherwise the lights go out and um you know we're seen that in austral Australia now I'll just give you a little example of of what I'm talking about um and the sort of thinking that you know appears uh in uh the political sphere once you have these geopolitical challenges so obviously Australia's Got huge renewable energy uh resources we get so much sun you know we get a lot of wind um but we don't really have a major solar industry and certainly not a major wind industry in terms of producing the equipment uh so we import all of that from China or most of it um there's about very tiny share of Australian production of solar panels uh domestically and and you know China is you know really the price leader and increasingly the quality leader in this area so Australia has you know little choice but to buy this from China right now um but you know that that then kind of makes people worry and say well we too riing on China I don't know they're relying on us you know we send them all the ion or we they're our biggest trading partner you know we get about almost aund billion of export revenues and minerals uh with uh commodi Sal to China uh you know iron ore and lithium and and nickel and other Commodities um so you know you have to ask a question are we really at risk that China would cut us off from solar energy supplies if we could cut them off from IR or and other things probably not not among sensible people if you have a you know a sensible diplomatic relationship with another country that's a major trading partner you should be able to manage those risks but look here's the kicker you know in Australia because you know China is the you know the you know the big elephant as it were in in in the Asia Pacific room um our politicians start to worry about this so now we have to subsidize to massive amounts of money you know measured in billions the creation of of new solar plants in the hunter Valley and uh they're not going to be economic I don't think um under any feasible scenario but nonetheless we're to spend this money to set them up and of course once they lose money we'll almost certainly then have to raise tariffs and put those on Chin's Imports which kind of defeats the whole purpose you see um and this is how you know the geopolitics the power transition yeah China's powerful we need to talk to them uh the energy transition and our own domestic situation are closely related and I believe that's replicated in many countries but can we apart from the fact that in the west we unfortunately are not blessed with a lot of sensible leaders but let's set that aside for a moment um the how do you see that the fact that China is now leading this new form of harnessing energy um that that interlinks with the power play of of um with the US and now also with maybe with Russia you know the the the geopolitics of it all because like energy is is is you're absolutely right it's often a driver for GE political decisions the whole reason why the Japanese went South in the second world war was to get to the oil in Indonesia because they were running out of oil because the US cut them off of their oil that was a kazus belli basically uh so that the energy and access to energy drives geopolitical thinking um now in the case of renewable energy how do you think it drives geopolitical decisions let's say in China and the US yeah look that's totally fascinating um you know historical link to ponder I think that's such a rich vein uh to examine you know the reasons why Japan entered the war in the second world war you know with being blockaded from energy supplies by the United States uh and then seeking you know within you know the structure not not to excuse what happened but but within the Imperial structure that then existed for the government of Japan uh they were presented with a specific problem how do we get you know energy and fuel all not only for the military but but just for society in general to operate how do we get that when we've being cut off from it um and you know we see this play out now I mean you mentioned earlier the semiconductor sanctions and um you know we'll elaborate on that later but but with the semiconductor sanctions you know you have a um to me personally as an investor a quite shocking parallel with the preor War II era with Japan uh you know um surprise attack on on the United States of PE Harbor because ultimately of of their Ambitions but also the fact that they've been cut off from energy uh and here you have the United States trying to cut China off from semiconductors um you know under the stated rationale that this is for national security reasons but let's remember that semiconductors are used in a host of different things um including electric vehicles in order to operate them as machinery and you know your Standard Electric Vehicle is not a piece of military hardware you know it's to get from A to B it's it's uh you know it's mostly civilian purchasing of EVS um and civilians driving them to to go about their ordinary workday and and here in Australia of course um you know the leading supplier of electric vehicles to Australia is China so let's relate all these things together so you you mentioned you know in the Trump uh presidency you know the initial fears oh we need to contain China do this and do that um and and then putting tariffs to keep EVS out of the United States so you know that's a reverse move to like the sanctions on China to prevent them getting semiconductors and and you know if it stopped there then maybe that wouldn't be a problem but but if you're trying to prevent China from developing its own semiconductors and you're not allowing them to buy them and they're so essential to EVS then we see how this energy transition this power transition have have sort of collided as it were and become one Wicked problem um you know if you think about it from the perspective of China um in any country the automobile uh industry if if they have one um is very important look at Germany in Europe um or Japan for auto manufacturing it's it's a big part of their economy so if you're preventing a a country that as actually the leading source of Autos you know China is the biggest Auto producer worldwide by by numbers and UNS if you're preventing them from acquiring the chips they need to make those Autos then you know you're creating a a very very difficult situation economically and politically and one wonders how that helps National Security to create that sort of conundrum and so again you're seeing the energy transition collide with the power transition as it were yeah the sorry the the thing with both of these is that there are um technology issues uh energy used to be a you know a typical typically geopolitical issue because either you have in your own territory access to these carbon carboh hydrates or um not hydrates carbo um Hons hydrocarbons thank you carbohydrates are the ones we eat hydrocarbons are the ones we hyd great yeah our energy carbohydrates machines yeah I always mix them up anyhow so hydrocarbons are you either have them on your soil or you don't and if you don't you need to trade them you need to get access to them or you need to go and take them it's it's it's pretty simple but now we are seeing a a change the change of that in the sense that if you have the technology uh to to build something you can harness it because the Sun Shines on God's green earth everywhere right um so do you is that something that you believe would impact the decision- making although to to to be fair like not everything can be run on on electricity right I've never seen a military plane or a or a tank running on electricity it's hard to imagine I mean for certain certain machines will always need hydrocarbons yeah I think that's fair and shipping is another good example you know there's just so much energy required to move a ship over long distances uh you know be be a shame if you're a battery powered ship and you got lower you got you got down to one bar in the middle of the Pacific yeah you kind of stop then um yeah so look um noting that fact um if we pick up that thread I think what's interesting and the reason why historically when we've had an energy transition and this is not the first one right so you know go back to to the Stone Age and discovery of fire you know you know turning turning trees into into heat you know to stay warm and cook and so on was is perhaps the First Energy transition and then many sense you know with the Industrial Revolution we had coal and I think the connection here is that it doesn't really matter what the energy source is when it changes we need need because of the physics involved um because it's all physics at the end of the day um uh you need a machine of some kind if you want to call it that uh to convert the energy we find in nature whether it's a carbohydrate for our digestive system uh as food or it's a hydrocarbon for you know the digestive system of an automobile which is a internal combustion engine um or it's electricity yeah um to put in a battery now uh we need machines to do that and clearly uh for solar you need solar panels and there's technology involved in that but there's also manufacturing knowhow there's raw materials there's manufacturing knowhow and with the manufacturing knoow there's also intellectual property and so the fascinating thing today you know if you for example what you mentioned um you know with President Donald Trump you know that there was this idea well United States is the greatest nation on Earth we've heard that from Joe Biden um recently we're the greatest Nations on Earth we can't fail at anything you know we are the leader um therefore if we um if we can prevent you know the great unwashed out there who want what we have from getting our knowhow and our technology by stopping them from receiving it then they just wither and die because without us they there's no possibility they could ever innovate and move forward and so this is a very simplistic idea that ought not to find currency in the modern world and and and it won't we are seeing right now that the Chinese have been making significant uh advances in their own domestic chips manufacturing and as you said like the the solar panels and this then creates new ways for China to interact with with Russia and with other bricks States and Nations and and do you think that this the fact that we have the power trans the uh the gray power transition will also now lead to a spread of of this technology or do you still think that countries like China at the end of the day will still um guard these these techn Technologies very jealously or will they proliferate over the bricks block that that's a that's a very interesting question and uh you know if I answer it with my kind of investment strategist hat on you know because very often this is the issue right look at company X company y company Zed uh look at the industry Dynamics and then ask yourself the question you know what's the natural strategy for the incumbent you know businesses us keep the competitors out um what's the natural strategy for a challenger you know be disruptive do things differently try the things that haven't been tried but most importantly in recent history with technology because this is really the key thing you you'll note that one of the most impregnable seeming um you know examples of Monopoly dominance in Tech specifically in Computing was the Wintel duopoly you know um Intel microchips and Microsoft operating system back in the 90s and it looked absolutely impregnable there's no way we'll ever beat these guys you know they've got it sewn up well that's before the lawyers get involved with anti trust but but let's put that to one side um you know the the community of Technology developers went Full Throttle and disruption once the Linux operating system arrived so that was open source and that was collaborative that was a case of sharing the tools as it were as The Barbarians you know you're not the Civilized people you're not Redmond um you're not Bill Gates you're not the richest guy in the world you're the uncivilized people outside the city ramparts the Linux developers you know attempting to lay waste to the Citadel and and and you claim the prize within so the natural thing to do is collaborate cooperate and share things um and my view is that China's fundamental motivation in this area is to do just that to share uh and we can see examples of that with some of their leading technology companies so for example if you look at the early days of Huawei before it actually got sanctioned uh they had sent up R&D centers All Around the World in fact Australia's then only leading R&D Center for telecommunications technology was based in melbour and it was a Huawei operation and and and when we sanctioned them they had to close it and then all the engineers who worked at that facility got fired and most of them had to immigrate because there was no other place in Australia they could work um so so if you think about what China's been doing historically um you know they've actually been doing the reverse of what what many allege which is trying to keep all their cards close to the chest no what they've been doing is actually going out into the world and trying to harness um resources uh on the ground in those countries uh that ultimately they they are clearly competing with um but but also looking to open his markets um now of course with huwei that's that's ended but if you look at contemporary amperes technology which is the leading lithium ion battery maker worldwide which is based in China um you know they they have a fairly open technology strategy now this doesn't mean that they give it away but what it means is if you want to work with cattle they they'll happily collaborate with you to apply their battery knowhow in your manufactured product on appropriate and non-restrictive Licensing terms as in let's do a commercial deal uh we're very open to do business and um this is not being very successful in the United States I mean they they did such a deal with the Ford Ford Motor Company because it made commercial sense for Ford when they wanted to build uh a battery plant in the United States uh to to to go uh license cattle technology because there's no real us automaker that has good technology in this area apart from Tesla and even Tesla license and use you know byd and cattle Battery Technology excuse me so Ford wanted to set up a battery plant um did the licenses with cattle and the agreements and so on but then you know the politics in the United States at the federal level sort of intervened and then there's State politics and then pretty soon there's these parties you know the the the the the uh how can I put this the um the the Flaming torches come out in the pitchforks um and people say we don't want this Factory here why the US yeah because it uses Chinese technology so that's what you see in the United States but you don't see that phenomena in Brazil you don't see that phenomena this is global South right isn't it odd you know we mentioned categories earlier so Hungary is Hungary part of the global South why do we use the term South yeah I I I need to explain just before we started filming we were like talking about the hypocrisy of the West and how anyone who's good counts as part of the liberal democracies even if you're Saudi Arabia uh and anyone who doesn't go along like Hungary is immediately deemed uh autocratic in the making right but that's the context yeah yeah so I guess the summary point of view here is within that framing of you know this uh existential struggle between the the good Democrats and the evil autocrats um and you know the Assumption underlying that is that oh well of course Democrats innovate and cooperate and collaborate and autocrats can't innovate because they're autocratic they they you know by definition autocracy has one person telling everybody what to do so how could you be Innovative if you've been told what to do and it's just a complete um kind of um oversimplification it's a nonsense it's it's upter nonsense I mean obviously ly these these C relatively centrally governed systems like China but also Vietnam and and Russia too now they have developed beautifully I they have they have functioning working economies but so um since you're an investor and since you have to um also work and and know a lot about different um investment environments I would actually like to know this from you like the the risks of investing into technology development in China versus the risk of investing into uh technology development in the United States because both of these both of them as you just said in the US too you might just syn a lot of money into something that in the end blows up uh and from China I've heard that the Chinese um are famous for basically very protectionist markets that make it very hard for for foreign um innovators but also investors what's your what can you tell us about that yeah look that's a great um comparison so starting from the top uh in the United States which does have a pretty sound Innovation System I I think that and it's not a protectionist market um you know at least not superficially but if you think about technology now it's a it's a market that's that's open yeah tick um not protectionist well not very um although it's moving that way um and so you could say well what's the risk of investing in in technology well don't invest in in companies that are small don't don't invest in companies that are competing with Nvidia don't invest in companies that competing with Microsoft don't invest in companies and competing with Amazon don't invest in companies and competing with alphabet or apple yeah because there there they're they're the dominant markets because they're the dominant they are the autocrats of this Market um and if you don't do what they tell you to um you're stuffed um and indeed if you're in such a company um they they they obviously M practice an open management style um but if you think about it it's a pretty regimented thing in terms of what that company will allow you to do and it's pretty and it's pretty mon monopolized in each of these sectors right there are there is competition but you know genuine competition looks different than when you have companies that that manage en entire ecosystems um but on the this is something that Ben Norton keeps pointing out really China is the only other country on Earth that has reached uh digital sovereignity um it has counter products to all the all the products that that fundamentally the US offers to to the Western uh allies and everything right um but invest into those would actually run the same risks as to the investment into the United States as an outsider right I mean they operate under very similar yeah so Huawei will be pretty dominant in the Chinese market for example as our cattle and byd and in this environment where you see um large government subsidies on offer in China I'm talking about um for the chip industry for example um now that that doesn't mean that there won't be new entrance that that that grab some of that and and there's obviously going to be a very non-transparent political process about how you persuade a local you know Communist party leader of the of the city of chanan or or wherever it happens to be why why you should be one of the anointed ones who get some money where there'll be there'll be a lot of glading process there right um in terms of getting the money uh but the money is available but the thing is that the I think the Communist Party of China and the associated government um which has many different levels and and I think it's unwise to assume that as some do that you know XI Jing ping wakes up in the morning and tells everybody what to do that's that's not really how contemporary China works and it was not how dynastic China worked either I would say um but but if you think about the Dynamics then the risks um in China is firstly the risk of either within or outside China in in terms of Technology investment is the you don't invest because that they they have a huge Innovation System so many scientists and engineers and scientists who are now operating at a truly global standard and doing new things all the time uh you see this in the lithium iron battery space and you also see it in solar panels uh you know to give you an example long energy which is one of the solar panel leaders you know they're really out in front on per Skype solar cells which is a new technology of high efficiency with significant manufacturing problems to solve to get it to production but they have the scale to be able to fund and do that R&D so the short version of this is that in China the biggest risk is not being invested in technology whether you are within China or outside of China because under the current policy settings and the strategic competition with the United States there is enormous dynamism within China to get as fast as possible to the Leading Edge of Manufacturing Technologies of all kinds and that's before you get into this contested digital sphere um and and I think from outside of China the standard rhetoric is well this is all about the the PLA and the military and I think that's nonsense um the biggest driver within China is the dog e dog world of Commerce um the what you know if sorry the dog eat dog world of Commerce you know just the brutal compet just look at the brutal competition in elect Vehicles you know this is this is not one state champion you know with a spigot of cash in the side and cars pouring out the other there are state-owned Enterprises in China um but they're finding it very difficult to survive against the um the privately owned new entrance um and and so the competition in the largest auto market in the world which is China with the largest number of electric vehicle you know contenders for the prize is just just Fierce um it is absolutely Fierce and the pace of innovation is truly incredible um you know I I'm a I'm a Tesla owner I bought a Tesla Model 3 about 18 months ago in Australia and when I look at the dashboard of it now it looks tired it's it looks tired it looks tired it's like a 1950s Morris um when you look inside you look I I get inside it having you know seen the Interiors of cars coming out of China now um and I I I say to myself it's as an investor this wouldn't be a popular view in the United States but as an investor I just stay away from Tesla's doc because they've lost this race um their capacity to innovate and keep up with consumer demand because remember if you're if you were CH I mean I'm not a Chinese obviously but but if you were Chinese and had grown up in China through this period of tremendous transformation of the market you would have grown up buying all kinds of indifferent poor quality products that broke the first time you used them at low prices and and so your early experience as a Chinese person was one of immense frustration with Chinese products because they kept bragging on you they didn't you they supposed to do or they were fake or they were this or they were that right um but now in the well not the biggest population that's India but but close to in in this particular commercial Market in China you have literally hundreds of millions of people whose life experience is to immediately reject anything that's crap as a product pardon my French um and and go find the thing that's good and so the Chinese themselves if you listen to Chinese leaders and companies that are private companies not not not following the dictates of of the central government other than what they need to stay in business um they will tell you that the biggest issue in China is satisfying consumer because these are the most demanding consumers on Earth um and so if you can satisfy a Chinese consumer it follows you can satisfy anybody anywhere this is the thing and this is the risk of not investing in technology in China it it is so interesting and I just need to point out I mean we are not doing any kind of uh uh investment uh uh uh um advice right this is not investment advice we are just talking about to my personal opinion as a Tesla owner I wouldn't buy the stock on the card of the stock all right um this is what's fascinating to me you know that this idea that because China is a officially communist country um it all it does is it can copy but it cannot innovate and that that idea seems to be very stuck even in in the heads of some policy makers in the west and then it leads to these stupid decisions of of of putting sanctions and believing that this will that that this will solve problems when in fact and this was a a Chinese uh uh academic who pointed that out but I forgot name but he pointed out you know China is a uh market economy but not a capitalist country because in capitalist countries Capital controls or has significant influence over uh the political process and that's what they don't have the political process governs what the what the economy is doing and not not the other way around but still the economy structured since Deng xaing as a market economy it's like okay you guys do you guys go compete and the best gets to the top and then you you you you compete further so they use the model and the model is producing obviously now for 30 years it it's it's funny to me that it seems so difficult for the West to wrap its head around that which then means if you if you break trading links well the Chinese just GNA figure out how to do it differently because they can because they can yeah you know the the water Finds Its course natural course it will it will move around well you know that that's a great metaphor I mean we know um you know one of the most powerful forces is in nature is is water because it it's formless you know it will just change it has its own nature but it finds its own path through gravity and then in freezing conditions it can fracture rocks and move mountains and reduce them to Rubble um and I think it's you you make a excellent point and if I could now sort of maybe amplify on you know the energy and power transition into what psychologically happens when you have such conditions then I think what you get is the makings of identity crises of different kinds so so these powerful geopolitical forces because politics is involved and let's remember politics is all about how do I as a politician appeal to voters if I'm I'm in a democracy or if I'm an autocrat leader how do I stay in power by you know not upsetting so many people um that you know that that they forc me out right in a coup or other means whatever means or in in in dynastic China getting poisoned you know something like that um so if you if you think about this issue there is an identity crisis which involves how our psyche how the way we think about the world adjusts to a change that at some point we recognize we can't control in the west I believe is undergoing an identity crisis about what it means to be Western um if it means anything at all I mean the West is not a homogeneous block I mean you you I think you spend most of your time in Japan is Japan part of the West to me it has always been the most eastern part of the West because it feels like that uh it but it's also it's it's by choice it's by design the Japanese 150 years ago 160 years ago 70 years ago chose to to like okay let's let's decouple from from the continent and just start imitating the Americans and the and the Europeans and it shows today they do it in their own way but it is very much structured like that it life feels different actually in already like in in in in in Taiwan and in Southeast Asia for sure it feels like a a very different vibe but I me in this sense then that's why Japan I will CM the to the collective West when we put it together although Japan is very very brilliant in uh in making the others believe that it does the same thing while actually doing something completely different flying under the hood again without providing investment advice that's why we're heavily invested in Japan yeah because uh they straddle the mountain as it were um they're able to navigate these different worlds but that brings me to one more another question that hand of my mind earlier but I would like to ask you now is um the the the the the change the geopolitical change is also leading to new it's leading to restrictions on the one hand in terms of what what what is being traded or what the US would like to see not traded but it's is leading to new trade flows inside the blocks I mean there's this whole concept of R sharing and now we are suddenly seeing a Taiwanese critical uh Technologies from the chip manufacturer PMC being they're building now a factory in Japan you know uh instead of producing locally because they want to diversify the risk of the geopolitical risk that's it you want to have a planned outside of of of striking range of the still in Striking range of the Chinese but it it might not be a primary target right um and this is now leading to to new to new uh um diversification actually of of of of trading and and using also technology um how do you think that will continue and what will be the impact of this new trading um environment I think it's it's really the main game um so there are many that have said uh in this sort of uh era that you might Mark with the first Trump Administration is when it got serious with trade restrictions emanating from the US um that that you know globalization was dead you know all whatever um if you look at the composition of trade so picking up your point about the adjustment of trade flows um globalization is not dead at all in fact it's continuing um you know global trade as your shair of the global economy GDP I believe is still Rising it's just that it's falling in some places and rising in others and one of the major uh effects that's happening is you know the rebirth of a of the of the nation of an entrepot uh country you entrepot is an old word meaning you know um a place where Traders meet and exchange goods uh and those goods and services they might not actually be manufactured in the trading center um what makes the trading center function is its Central role in trade routes it's a place where people can be and you see this you can you can always finger these these locations because uh if you look at their external trade the external trade is often a multiple of the GDP so if you looked in finance that would be Switzerland yeah or Singapore and Singapore and goods and finance Hong Kong and you know some people have written Hong Kong off I would say don't write Hong Kong off it's going to be resurgent and much more powerful and important in the future for a very simple reason Hong Kong's a classic entrepot community and has been you know for forever of course there've been political troubles there but a good friend of mine said Hong Kong people they don't care about politics they care about Commerce so so as long as the politicians leave them alone enough they'll get on with business um and so under this new uh world where if you think about it what's actually happened is something quite simple it used to be that Hong Kong was where a western multinational went to interface with China which has closed Capital controls so they could do business in China now a lot of those Western firms have left so who will be the new people that come to Hong Kong to replace them it'll be the mainland Chinese multinationals seeking to escape the capital controls in China that need a dollar basis economy through the Hong Kong Peg to do business with the rest of the world and then manage their repatriation through the capital control system back into the mainland so Hong Kong hasn't lost its role at all in fact its role is Amplified become even more important so um you know we think that there was a necessary adjustment as people thought well how far is this political repression going to go in Hong Kong when clearly the the Chinese government got concerned that they might have separatist Ambitions or Democratic Ambitions or or whatever right and so they cracked down very hard now it seems to have moderated to the point where well let's not go too crazy this is very valuable to the Chinese authorities to have Hong Kong as a functioning Center of Trade I think they'll probably relax a little bit more now because in fact what's going to happen is Chinese multinationals will be pre pressuring the Chinese government to to relax these controls so they can do business with other countries that pleases the Chinese central government so Hong Kong trading with Brazil Hong Kong trading with you mentioned Hungary Hong Kong trading with Malaysia and Vietnam and Singapore and Australia all kinds of places yeah it's it's quite important and again it's like the stupid narrative from of the West that kind of clouds the the the and that makes you believe that Hong Kong was completely integrated into China and it's the same now no they still have a special regulatory system that is different from mainland China the one thing China did is it built a little Bridge a legal bridge that makes it possible for them to take out anyone they want who who might be doing like uh separatist movements or whatever that's all they did but the rest they didn't actually touch until 2047 or 2049 Hong Kong still has special separate law uh especially govern the the business sector yeah and and so you know if you think about it from the perspective of someone who's doing business internationally uh you know I'm not I'm not saying um such people should ignore the political situation in Hong Kong or you know not advocate for what they think is um a better way uh for the central government in China to um manage you know the the Hong Kong question right however you choose to frame the question um but but what I am saying is that and it comes back to the power transition yeah what what I'm what I'm identifying with Hong Kong is Hong Kong was important throughout history because of its port and and similarly maau um you know and and we we identify these these two although they're adjacent we identify them differently because they were historically in the hands of different Mercantile powers that were seeking to use them for trade you know whether it's Portuguese or it's the or it's the British and if we remember how the connection from Hong Kong into mainland China first became prominent it was through the IGN Noble means of of um some some interests you know from what we now called the West um seeking to sell opium into China two Wars fighting two Wars for the right to sell opium to Chinese people yeah yeah so if you reverse sorry go ahead no no please yeah so if you invert that ju Just because we're now talking about a power transition where China becomes more important in global trade than it was then yeah in terms of trade external to Chinese borders because it was fairly you know it was important trade but not not as big an economy say as it was um as it is now um what I mean to say is Hong Kong had that role then and has played that role throughout history to presume that it won't play a similar role going forward is to misunderstand why it was ever important yeah to to understand the future of it in geopolitical terms you have to understand which power center is now guiding the future of Hong Kong well undoubtedly that is mainland China in terms of trade why is Hong Kong important because it is the Nexus between East and West it's the place where a Chinese multinational can do business in Hong Kong dollars which are fungible to US Dollars effectively pegged um and it can use the US dollar for international trade effectively hedge it um and this is why I don't think that the US dollar will disappear from trade it's not in China's interest for that to happen if Hong Kong is their major portal to the outside world uh Chinese multinationals will discount the incoming US Dollars and which are Hong Kong dollars and then use whatever they need to do to repatriate them to Mainland China to pay their taxes and build their factories and do whatever they need to do yeah which which leads me to my the last big question that I want to ask because on YouTube something that we see have been seeing over the last one two years is the buzz word and it's very popular it's like dollarization this is the end of the dollar and the world is going to change and uh while I do think yes I mean the end of the Petro dollar and and the emergence of alternative payment systems the alternative to a swift system and trading in local currencies all of this is new and it is significant and it will impact uh trade but at the end of the day the important thing is still that goods are moving and that trade is happening uh the way how it happens to me is somehow secondary while I do recognize I mean it gives the the the US dollar an outsized uh importance so decreasing that will have domestic impact in the United States although I don't think as huge as as as people think it will um what is your assessment of this change of of well the role of the dollar and the new systems that are apparently being created at the moment yeah look it's it's really the huge question for finance um I think firstly we have to recognize that what's different about the the you know post Britain Woods system we've had with with um the US dollar isn't as you recall initially it was backed by gold and then Nixon took us off the gold standard formally um in I think was 71 uh and and then we moved to Fiat money um but but I I would argue that it was never really a system without an anchor it's just that the anchor hadn't been thought out very clearly so what I mean by anchor is a a standard by which you measure the value of a US dollar um and formerly it was it was gold commodity but but if you think about the industrialized West and the post industrialized West where large parts of our economy are Services uh it's natural that the anchor has been you this relationship between labor cost and the things that labor needs to function Housing Shelter food and that's why we've had this sort of CPI management Consumer Price inflation monetary policy to sort of manage the you know the value of the fat currency to some kind of notional standard which is 2% inflation or whatever now that system is obviously breaking right now it's breaking in several ways it's breaking because we're seeing um cost of living Rises that are leading to extreme political unrest in the United States in Europe and even in Australia um and I think a big reason for that is that the monetary authorities and I don't wish to um blame anybody for this I just want to make an observation that's a view mirror observation from history is well illustrated by bringing in Gold into the into the story and I'll tell you a short version of this story it's well illustrated by the Australian experience because the Australian dollar we're a good big gold producer you know um used to be number two I think we're number three now it doesn't matter um but we're historically over the last 150 years been a big gold producer usually in the top three globally now we don't base our currency on gold but for many years um the Australian dollar was fairly steady in Gold you know for a long period in the 90s it traded roughly $500 an ounce and so if you looked at the real return on um for holding gold in Australian dollars it was was kind of negative yeah um but all of that changed when China entered the WTO so did a small research piece on this and I'll give you the short version so what happened after and it wasn't specifically entry to WTO it's just that China's trade with the world increased around that time and not only because of that in many ways the reason they entered the WTO was their trade level was Rising um and they needed to normalize okay so if you if you measure the return on holding gold in Australian dollars not US Dollars um since about 2002 when China entered WTO it's a shocking number the nominal return is between eight and % per anom wow it's better than a bank account so that ought to tell you that something weird is going on right how come people putting their money in bank accounts when if they just bought a gold bar and left it in basement they would have made more money right and also Australians are are very very keen on real estate real estate numbers for return on investment is about 10% perom over the same period and that ignores the depreciation on holding costs of property um you know because your house depreciate you have to spend money to keep it up rates and all the rest of it so this is very strange how come you know in in in sort of handwavy chart terms Australian dollar gold was doing this up until China entered the W and then it did this and it hasn't stopped doing that and I think the the reason my reason people will disagree my reason is that actually we were managing our monetary policy to CPI the Consumer Price Index and a big component of the Consumer Price Index in terms of prices was traded Goods coming from China which got cheaper right so imagine imagine your monitoring managing your interest rate saying well as long as inflation is not above 2% we're fine yeah but one part of that basket is doing this because it's the goods coming in from China and the other part of the basket is doing this which is housing costs and and rents and which translates to labor costs on average it's say the same you've distorted your monetary policy effectively what you've done is you've set interest rates too low and you know I use that analogy of water water finds way economics is similar yeah if you set your monetary policy too low in terms of interest rates what will happen is the system will figure it out um and you'll see inflation in some other area you weren't watching and that was house prices um and so now our house prices are unaffordable because actually we ran interest rates too low earlier but because we ran interest rates too low because we weren't taking account of this Cher effect gold noticed that and went up um land noticed that went up real estate which is built on land noticed that and went up sometime after this as as in as as in consumer noticed it and started buying these Goods instead of the other ones which became more more relatively more expensive yeah exactly so so what I'm saying is it's fairly clear I think when you look at that data and reflect on um the natural consequences of a changing price structure on both labor and goods is that uh you were looking at CPI as an anchor to the monetary system this is the US dollar global system yeah and and you were assuming that your monetary levels were set right whereas in fact in hindsight you probably had your interest rates too low so that accelerated financialization and de-industrialization in these countries the west but at the same time it also elevated housing costs and created this stored up political problem of no one can afford to buy a house if they're young yeah at some point all these problems Collide at some point we have to talk again because I have this very strong feeling that people uh seriously misunderstand currencies and you know currencies for you as an investor are just another option in within a portfolio right because you are aware that everything traits in relationship to everything else and it just moves up and down it's not it's not that everything is anchored to the US dollar and if the US dollar goes down then the others go up it's just not how it works um yeah and in this sense I I really I really think that there's this this this mis misunderstanding because people also think that a currency that goes down is a weak currency equals bad but no a jeap currency just means one thing it means that Goods that come from the out get more expensive and your own Goods to the outside get less expensive which means that you will probably end up starting like reshaping your economic structure in order to do more exports Pascal you need a Nobel prize in economics because that is true thank you very much but why is it that a lot of people misunderstand this so actually a cheap US dollar my friends is going to be good for the United States because they restructure over 10 years and become manufacturing Powerhouse they already it's what I would call a good tariff it has the effect that people want from tariffs so let's just run that right so look at Japan of course the econom is a bit weak right now but you've got this very weak Yen which has made Japanese manufacturing much more competitive yeah yeah and they're they're they're bringing factories back because you know it this is what another fascinating thing I'm not sure if it's going to go this way but if the Japanese y continues to develop the way it does um then we will for the first time have a cheap labor developed Nation because the develop the development standard inside Japan is superb highest level and if the Yen continues tanking then we're going to have highest level like developed nation that is going to be you know competing with Vietnam over producing stuff and I don't know the Japanese name for it but I really want to go up to Japan because I've heard about these you know these abandoned homes because everyone wants a new home in Japan and there's these abandoned homes in the country yeah the population is going down right so the the houses are opening yes and I look at that and I think wow you know except for the immigration Challenge and the Lang language challenge but you know with AI now you can at least use translation to try to you know help yourself communicate um but you know you've got all the conditions there for um you know effectively service workers operating in Japan probably serving Japanese clients and also Global clients as a very attractive destination yeah yeah the the only the only thing I must say is like the biggest problem is is regulatory uh the the the foreign population in Japan is below 2% yes of course and they're not they're not aiming at increasing it so they have structural barriers um um well yeah yeah yes anyway look there fabulous thoughts and uh I I just want to leave you with that idea that that I think that gold is important once more for the reasons I mentioned because if you're Chinese or you're Australian you make more money on holding gold in your basement you do on a bank account that's what the Chinese are doing they're buying it Australians haven't figured it out yet because they've got an alternative they go buy housing which is is going to the Moon that's not going to the Moon in China anymore so by the gold by the gold um Australia housing can't go to the Moon any closer because no one can afford it so I think gold will become popular again yeah but the big risk with gold is as with any other good if people stop buying it then price will go down again so as long as people keep buying it um anyhow um we went a little bit left and right into the on God's green earth but I hope everybody that you enjoyed this and I would like to thank uh Dr Kingsley Jones for your time you told me that you have a substack where can people follow you oh uh so the name of the sub substack is savy yabby so yeab is a little crustation in Australia so Savvy savy yabi YB y.com and we have a free newsletter on there and a paid version as well I will uh I will put the links into the description um I really enjoyed the the talk with you uh Dr Jones see you next time thank you very much pescal pleasure being on

so when we change our Energy System we have to ask where the energy comes from and who&#39;s actually leading in in terms of producing the new equipment we need to harness that uh source of energy and I think if you look around the world today the answer who is leading the energy transition in business terms is fundamentally obvious it&#39;s China China is uh you know the leading producer of renewable energy equipment on which companies and governments spend money to implement uh the energy transition as it were uh and they were also leading in areas like Mobility you know with electric vehicles so it&#39;s pretty clear that geopolitics is going to loom large when you have to do this transition hello everybody this is Pascal from neutrality studies and today I&#39;m talking to Dr Kingsley Jones who is a founding partner and CIO for Chev Global an australian-based investment firm before running his own company Dr Jones has been serving for many years as a PO portfolio manager and the head for quantitative trading research units in various other firms in short Dr Jones is a professional analyst and one who pays a lot of attention to geopolitical impacts on global markets today we want to discuss something that has been flying somewhat under the radar and that he pointed out to me namely the Nexus between this fundamental shifts that we are seeing at the moment on the one hand an energy transition away from fossil fuels and on the other hand a power transition uh in international geopolitics away from you know the Western centered liberal capitalism if that&#39;s the right thing to call it but we want to bring that together today uh Dr Jo Jones thank you for joining me today oh it&#39;s an absolute pleasure to be here Pascal I&#39;m very much enjoy watching your videos at neutrality study so uh you know it&#39;s great to meet you in person and have a good chat it&#39;s great talking to you because the there&#39;s not many analysts who try to use geopolitics in markets although of course everybody has to use it a little bit but I think for you it&#39;s your bread and butter um as you&#39;ve been telling me before before the the chat a bit that you try to look at the the large picture also for long-term investment and you know it needs to be very concrete though right because you do you do actual investment so um why do you think that this has been underappreciated that we are also seeing energy transition happening um while the the geopolitical system is changing yeah look that&#39;s a really really great Rabbit Hole to go down we think because energy transition is accepted we&#39;re moving from fossil fuels uh we need new sources of energy whether it&#39;s renewable energy like solar and wind and tidal and hydro and other things or or it&#39;s uh you know perhaps it&#39;s nuclear at the margin or or even some new ideas that have yet to really be progressed so the energy transition is a big thing it&#39;s accepted so it&#39;s a valid question why on Earth would that relate to geopolitics and the fact that we&#39;re seeing all this geopolitical change right now you know is we can&#39;t think really about causes but is there a reason why these two things are related and from an investment perspective I very much think that the answer to that is yes uh that these two things are related and they are so for a very very simple economic reason when you have the energy system remember that powers our machines we as humans we we need food for our labor but for any sort of machines whether it&#39;s a you know a tractor or a car or a factory uh they need energy and indeed data warehouses need energy also as we&#39;re seeing with AI so when we change our Energy System we have to ask where the energy comes from and who&#39;s actually leading in terms of producing the new equipment we need to harness that uh source of energy and I think if you look around the world today the answer who is leading the energy transition in business terms is fundamentally obvious it&#39;s China China is uh you know the leading producer of renewable energy equipment on which companies and governments spend money to implement uh the energy transition as it were uh and they were also leading in areas like Mobility you know with electric vehicles so it&#39;s pretty clear that geopolitics is going to loom large when you have to do this transition and there&#39;s you know the new kit on the Block very old country resurgent as an economy China thinking about the world in different ways doing business in different ways having a different form of government and being the supplier of this new form of energy uh at scale and that&#39;s a huge Challenge and that&#39;s why we see the energy and power transition as being related you know it&#39;s been interesting to me that the the Biden Administration but even before him uh the Trump Administration in the US in general is very keen on projecting this image that if we if we just cut China well enough off Western markets especially in uh high technology in in microchip uh uh uh technology which is fundamentally liography technology it&#39;s not the chips it&#39;s the the machines that make the chips that you that that they&#39;re trying to restrict to them then problem will be solved you know China won&#39;t be able to rise any further but now you&#39;re saying that&#39;s not even it it&#39;s the it&#39;s the energy dummy yeah we would say that I mean we&#39;ll have a a a think about what you raised there with chips in a moment but yeah look it&#39;s the energy dummy because uh you know otherwise the lights go out and um you know we&#39;re seen that in austral Australia now I&#39;ll just give you a little example of of what I&#39;m talking about um and the sort of thinking that you know appears uh in uh the political sphere once you have these geopolitical challenges so obviously Australia&#39;s Got huge renewable energy uh resources we get so much sun you know we get a lot of wind um but we don&#39;t really have a major solar industry and certainly not a major wind industry in terms of producing the equipment uh so we import all of that from China or most of it um there&#39;s about very tiny share of Australian production of solar panels uh domestically and and you know China is you know really the price leader and increasingly the quality leader in this area so Australia has you know little choice but to buy this from China right now um but you know that that then kind of makes people worry and say well we too riing on China I don&#39;t know they&#39;re relying on us you know we send them all the ion or we they&#39;re our biggest trading partner you know we get about almost aund billion of export revenues and minerals uh with uh commodi Sal to China uh you know iron ore and lithium and and nickel and other Commodities um so you know you have to ask a question are we really at risk that China would cut us off from solar energy supplies if we could cut them off from IR or and other things probably not not among sensible people if you have a you know a sensible diplomatic relationship with another country that&#39;s a major trading partner you should be able to manage those risks but look here&#39;s the kicker you know in Australia because you know China is the you know the you know the big elephant as it were in in in the Asia Pacific room um our politicians start to worry about this so now we have to subsidize to massive amounts of money you know measured in billions the creation of of new solar plants in the hunter Valley and uh they&#39;re not going to be economic I don&#39;t think um under any feasible scenario but nonetheless we&#39;re to spend this money to set them up and of course once they lose money we&#39;ll almost certainly then have to raise tariffs and put those on Chin&#39;s Imports which kind of defeats the whole purpose you see um and this is how you know the geopolitics the power transition yeah China&#39;s powerful we need to talk to them uh the energy transition and our own domestic situation are closely related and I believe that&#39;s replicated in many countries but can we apart from the fact that in the west we unfortunately are not blessed with a lot of sensible leaders but let&#39;s set that aside for a moment um the how do you see that the fact that China is now leading this new form of harnessing energy um that that interlinks with the power play of of um with the US and now also with maybe with Russia you know the the the geopolitics of it all because like energy is is is you&#39;re absolutely right it&#39;s often a driver for GE political decisions the whole reason why the Japanese went South in the second world war was to get to the oil in Indonesia because they were running out of oil because the US cut them off of their oil that was a kazus belli basically uh so that the energy and access to energy drives geopolitical thinking um now in the case of renewable energy how do you think it drives geopolitical decisions let&#39;s say in China and the US yeah look that&#39;s totally fascinating um you know historical link to ponder I think that&#39;s such a rich vein uh to examine you know the reasons why Japan entered the war in the second world war you know with being blockaded from energy supplies by the United States uh and then seeking you know within you know the structure not not to excuse what happened but but within the Imperial structure that then existed for the government of Japan uh they were presented with a specific problem how do we get you know energy and fuel all not only for the military but but just for society in general to operate how do we get that when we&#39;ve being cut off from it um and you know we see this play out now I mean you mentioned earlier the semiconductor sanctions and um you know we&#39;ll elaborate on that later but but with the semiconductor sanctions you know you have a um to me personally as an investor a quite shocking parallel with the preor War II era with Japan uh you know um surprise attack on on the United States of PE Harbor because ultimately of of their Ambitions but also the fact that they&#39;ve been cut off from energy uh and here you have the United States trying to cut China off from semiconductors um you know under the stated rationale that this is for national security reasons but let&#39;s remember that semiconductors are used in a host of different things um including electric vehicles in order to operate them as machinery and you know your Standard Electric Vehicle is not a piece of military hardware you know it&#39;s to get from A to B it&#39;s it&#39;s uh you know it&#39;s mostly civilian purchasing of EVS um and civilians driving them to to go about their ordinary workday and and here in Australia of course um you know the leading supplier of electric vehicles to Australia is China so let&#39;s relate all these things together so you you mentioned you know in the Trump uh presidency you know the initial fears oh we need to contain China do this and do that um and and then putting tariffs to keep EVS out of the United States so you know that&#39;s a reverse move to like the sanctions on China to prevent them getting semiconductors and and you know if it stopped there then maybe that wouldn&#39;t be a problem but but if you&#39;re trying to prevent China from developing its own semiconductors and you&#39;re not allowing them to buy them and they&#39;re so essential to EVS then we see how this energy transition this power transition have have sort of collided as it were and become one Wicked problem um you know if you think about it from the perspective of China um in any country the automobile uh industry if if they have one um is very important look at Germany in Europe um or Japan for auto manufacturing it&#39;s it&#39;s a big part of their economy so if you&#39;re preventing a a country that as actually the leading source of Autos you know China is the biggest Auto producer worldwide by by numbers and UNS if you&#39;re preventing them from acquiring the chips they need to make those Autos then you know you&#39;re creating a a very very difficult situation economically and politically and one wonders how that helps National Security to create that sort of conundrum and so again you&#39;re seeing the energy transition collide with the power transition as it were yeah the sorry the the thing with both of these is that there are um technology issues uh energy used to be a you know a typical typically geopolitical issue because either you have in your own territory access to these carbon carboh hydrates or um not hydrates carbo um Hons hydrocarbons thank you carbohydrates are the ones we eat hydrocarbons are the ones we hyd great yeah our energy carbohydrates machines yeah I always mix them up anyhow so hydrocarbons are you either have them on your soil or you don&#39;t and if you don&#39;t you need to trade them you need to get access to them or you need to go and take them it&#39;s it&#39;s it&#39;s pretty simple but now we are seeing a a change the change of that in the sense that if you have the technology uh to to build something you can harness it because the Sun Shines on God&#39;s green earth everywhere right um so do you is that something that you believe would impact the decision- making although to to to be fair like not everything can be run on on electricity right I&#39;ve never seen a military plane or a or a tank running on electricity it&#39;s hard to imagine I mean for certain certain machines will always need hydrocarbons yeah I think that&#39;s fair and shipping is another good example you know there&#39;s just so much energy required to move a ship over long distances uh you know be be a shame if you&#39;re a battery powered ship and you got lower you got you got down to one bar in the middle of the Pacific yeah you kind of stop then um yeah so look um noting that fact um if we pick up that thread I think what&#39;s interesting and the reason why historically when we&#39;ve had an energy transition and this is not the first one right so you know go back to to the Stone Age and discovery of fire you know you know turning turning trees into into heat you know to stay warm and cook and so on was is perhaps the First Energy transition and then many sense you know with the Industrial Revolution we had coal and I think the connection here is that it doesn&#39;t really matter what the energy source is when it changes we need need because of the physics involved um because it&#39;s all physics at the end of the day um uh you need a machine of some kind if you want to call it that uh to convert the energy we find in nature whether it&#39;s a carbohydrate for our digestive system uh as food or it&#39;s a hydrocarbon for you know the digestive system of an automobile which is a internal combustion engine um or it&#39;s electricity yeah um to put in a battery now uh we need machines to do that and clearly uh for solar you need solar panels and there&#39;s technology involved in that but there&#39;s also manufacturing knowhow there&#39;s raw materials there&#39;s manufacturing knowhow and with the manufacturing knoow there&#39;s also intellectual property and so the fascinating thing today you know if you for example what you mentioned um you know with President Donald Trump you know that there was this idea well United States is the greatest nation on Earth we&#39;ve heard that from Joe Biden um recently we&#39;re the greatest Nations on Earth we can&#39;t fail at anything you know we are the leader um therefore if we um if we can prevent you know the great unwashed out there who want what we have from getting our knowhow and our technology by stopping them from receiving it then they just wither and die because without us they there&#39;s no possibility they could ever innovate and move forward and so this is a very simplistic idea that ought not to find currency in the modern world and and and it won&#39;t we are seeing right now that the Chinese have been making significant uh advances in their own domestic chips manufacturing and as you said like the the solar panels and this then creates new ways for China to interact with with Russia and with other bricks States and Nations and and do you think that this the fact that we have the power trans the uh the gray power transition will also now lead to a spread of of this technology or do you still think that countries like China at the end of the day will still um guard these these techn Technologies very jealously or will they proliferate over the bricks block that that&#39;s a that&#39;s a very interesting question and uh you know if I answer it with my kind of investment strategist hat on you know because very often this is the issue right look at company X company y company Zed uh look at the industry Dynamics and then ask yourself the question you know what&#39;s the natural strategy for the incumbent you know businesses us keep the competitors out um what&#39;s the natural strategy for a challenger you know be disruptive do things differently try the things that haven&#39;t been tried but most importantly in recent history with technology because this is really the key thing you you&#39;ll note that one of the most impregnable seeming um you know examples of Monopoly dominance in Tech specifically in Computing was the Wintel duopoly you know um Intel microchips and Microsoft operating system back in the 90s and it looked absolutely impregnable there&#39;s no way we&#39;ll ever beat these guys you know they&#39;ve got it sewn up well that&#39;s before the lawyers get involved with anti trust but but let&#39;s put that to one side um you know the the community of Technology developers went Full Throttle and disruption once the Linux operating system arrived so that was open source and that was collaborative that was a case of sharing the tools as it were as The Barbarians you know you&#39;re not the Civilized people you&#39;re not Redmond um you&#39;re not Bill Gates you&#39;re not the richest guy in the world you&#39;re the uncivilized people outside the city ramparts the Linux developers you know attempting to lay waste to the Citadel and and and you claim the prize within so the natural thing to do is collaborate cooperate and share things um and my view is that China&#39;s fundamental motivation in this area is to do just that to share uh and we can see examples of that with some of their leading technology companies so for example if you look at the early days of Huawei before it actually got sanctioned uh they had sent up R&amp;D centers All Around the World in fact Australia&#39;s then only leading R&amp;D Center for telecommunications technology was based in melbour and it was a Huawei operation and and and when we sanctioned them they had to close it and then all the engineers who worked at that facility got fired and most of them had to immigrate because there was no other place in Australia they could work um so so if you think about what China&#39;s been doing historically um you know they&#39;ve actually been doing the reverse of what what many allege which is trying to keep all their cards close to the chest no what they&#39;ve been doing is actually going out into the world and trying to harness um resources uh on the ground in those countries uh that ultimately they they are clearly competing with um but but also looking to open his markets um now of course with huwei that&#39;s that&#39;s ended but if you look at contemporary amperes technology which is the leading lithium ion battery maker worldwide which is based in China um you know they they have a fairly open technology strategy now this doesn&#39;t mean that they give it away but what it means is if you want to work with cattle they they&#39;ll happily collaborate with you to apply their battery knowhow in your manufactured product on appropriate and non-restrictive Licensing terms as in let&#39;s do a commercial deal uh we&#39;re very open to do business and um this is not being very successful in the United States I mean they they did such a deal with the Ford Ford Motor Company because it made commercial sense for Ford when they wanted to build uh a battery plant in the United States uh to to to go uh license cattle technology because there&#39;s no real us automaker that has good technology in this area apart from Tesla and even Tesla license and use you know byd and cattle Battery Technology excuse me so Ford wanted to set up a battery plant um did the licenses with cattle and the agreements and so on but then you know the politics in the United States at the federal level sort of intervened and then there&#39;s State politics and then pretty soon there&#39;s these parties you know the the the the the uh how can I put this the um the the Flaming torches come out in the pitchforks um and people say we don&#39;t want this Factory here why the US yeah because it uses Chinese technology so that&#39;s what you see in the United States but you don&#39;t see that phenomena in Brazil you don&#39;t see that phenomena this is global South right isn&#39;t it odd you know we mentioned categories earlier so Hungary is Hungary part of the global South why do we use the term South yeah I I I need to explain just before we started filming we were like talking about the hypocrisy of the West and how anyone who&#39;s good counts as part of the liberal democracies even if you&#39;re Saudi Arabia uh and anyone who doesn&#39;t go along like Hungary is immediately deemed uh autocratic in the making right but that&#39;s the context yeah yeah so I guess the summary point of view here is within that framing of you know this uh existential struggle between the the good Democrats and the evil autocrats um and you know the Assumption underlying that is that oh well of course Democrats innovate and cooperate and collaborate and autocrats can&#39;t innovate because they&#39;re autocratic they they you know by definition autocracy has one person telling everybody what to do so how could you be Innovative if you&#39;ve been told what to do and it&#39;s just a complete um kind of um oversimplification it&#39;s a nonsense it&#39;s it&#39;s upter nonsense I mean obviously ly these these C relatively centrally governed systems like China but also Vietnam and and Russia too now they have developed beautifully I they have they have functioning working economies but so um since you&#39;re an investor and since you have to um also work and and know a lot about different um investment environments I would actually like to know this from you like the the risks of investing into technology development in China versus the risk of investing into uh technology development in the United States because both of these both of them as you just said in the US too you might just syn a lot of money into something that in the end blows up uh and from China I&#39;ve heard that the Chinese um are famous for basically very protectionist markets that make it very hard for for foreign um innovators but also investors what&#39;s your what can you tell us about that yeah look that&#39;s a great um comparison so starting from the top uh in the United States which does have a pretty sound Innovation System I I think that and it&#39;s not a protectionist market um you know at least not superficially but if you think about technology now it&#39;s a it&#39;s a market that&#39;s that&#39;s open yeah tick um not protectionist well not very um although it&#39;s moving that way um and so you could say well what&#39;s the risk of investing in in technology well don&#39;t invest in in companies that are small don&#39;t don&#39;t invest in companies that are competing with Nvidia don&#39;t invest in companies that competing with Microsoft don&#39;t invest in companies and competing with Amazon don&#39;t invest in companies and competing with alphabet or apple yeah because there there they&#39;re they&#39;re the dominant markets because they&#39;re the dominant they are the autocrats of this Market um and if you don&#39;t do what they tell you to um you&#39;re stuffed um and indeed if you&#39;re in such a company um they they they obviously M practice an open management style um but if you think about it it&#39;s a pretty regimented thing in terms of what that company will allow you to do and it&#39;s pretty and it&#39;s pretty mon monopolized in each of these sectors right there are there is competition but you know genuine competition looks different than when you have companies that that manage en entire ecosystems um but on the this is something that Ben Norton keeps pointing out really China is the only other country on Earth that has reached uh digital sovereignity um it has counter products to all the all the products that that fundamentally the US offers to to the Western uh allies and everything right um but invest into those would actually run the same risks as to the investment into the United States as an outsider right I mean they operate under very similar yeah so Huawei will be pretty dominant in the Chinese market for example as our cattle and byd and in this environment where you see um large government subsidies on offer in China I&#39;m talking about um for the chip industry for example um now that that doesn&#39;t mean that there won&#39;t be new entrance that that that grab some of that and and there&#39;s obviously going to be a very non-transparent political process about how you persuade a local you know Communist party leader of the of the city of chanan or or wherever it happens to be why why you should be one of the anointed ones who get some money where there&#39;ll be there&#39;ll be a lot of glading process there right um in terms of getting the money uh but the money is available but the thing is that the I think the Communist Party of China and the associated government um which has many different levels and and I think it&#39;s unwise to assume that as some do that you know XI Jing ping wakes up in the morning and tells everybody what to do that&#39;s that&#39;s not really how contemporary China works and it was not how dynastic China worked either I would say um but but if you think about the Dynamics then the risks um in China is firstly the risk of either within or outside China in in terms of Technology investment is the you don&#39;t invest because that they they have a huge Innovation System so many scientists and engineers and scientists who are now operating at a truly global standard and doing new things all the time uh you see this in the lithium iron battery space and you also see it in solar panels uh you know to give you an example long energy which is one of the solar panel leaders you know they&#39;re really out in front on per Skype solar cells which is a new technology of high efficiency with significant manufacturing problems to solve to get it to production but they have the scale to be able to fund and do that R&amp;D so the short version of this is that in China the biggest risk is not being invested in technology whether you are within China or outside of China because under the current policy settings and the strategic competition with the United States there is enormous dynamism within China to get as fast as possible to the Leading Edge of Manufacturing Technologies of all kinds and that&#39;s before you get into this contested digital sphere um and and I think from outside of China the standard rhetoric is well this is all about the the PLA and the military and I think that&#39;s nonsense um the biggest driver within China is the dog e dog world of Commerce um the what you know if sorry the dog eat dog world of Commerce you know just the brutal compet just look at the brutal competition in elect Vehicles you know this is this is not one state champion you know with a spigot of cash in the side and cars pouring out the other there are state-owned Enterprises in China um but they&#39;re finding it very difficult to survive against the um the privately owned new entrance um and and so the competition in the largest auto market in the world which is China with the largest number of electric vehicle you know contenders for the prize is just just Fierce um it is absolutely Fierce and the pace of innovation is truly incredible um you know I I&#39;m a I&#39;m a Tesla owner I bought a Tesla Model 3 about 18 months ago in Australia and when I look at the dashboard of it now it looks tired it&#39;s it looks tired it looks tired it&#39;s like a 1950s Morris um when you look inside you look I I get inside it having you know seen the Interiors of cars coming out of China now um and I I I say to myself it&#39;s as an investor this wouldn&#39;t be a popular view in the United States but as an investor I just stay away from Tesla&#39;s doc because they&#39;ve lost this race um their capacity to innovate and keep up with consumer demand because remember if you&#39;re if you were CH I mean I&#39;m not a Chinese obviously but but if you were Chinese and had grown up in China through this period of tremendous transformation of the market you would have grown up buying all kinds of indifferent poor quality products that broke the first time you used them at low prices and and so your early experience as a Chinese person was one of immense frustration with Chinese products because they kept bragging on you they didn&#39;t you they supposed to do or they were fake or they were this or they were that right um but now in the well not the biggest population that&#39;s India but but close to in in this particular commercial Market in China you have literally hundreds of millions of people whose life experience is to immediately reject anything that&#39;s crap as a product pardon my French um and and go find the thing that&#39;s good and so the Chinese themselves if you listen to Chinese leaders and companies that are private companies not not not following the dictates of of the central government other than what they need to stay in business um they will tell you that the biggest issue in China is satisfying consumer because these are the most demanding consumers on Earth um and so if you can satisfy a Chinese consumer it follows you can satisfy anybody anywhere this is the thing and this is the risk of not investing in technology in China it it is so interesting and I just need to point out I mean we are not doing any kind of uh uh investment uh uh uh um advice right this is not investment advice we are just talking about to my personal opinion as a Tesla owner I wouldn&#39;t buy the stock on the card of the stock all right um this is what&#39;s fascinating to me you know that this idea that because China is a officially communist country um it all it does is it can copy but it cannot innovate and that that idea seems to be very stuck even in in the heads of some policy makers in the west and then it leads to these stupid decisions of of of putting sanctions and believing that this will that that this will solve problems when in fact and this was a a Chinese uh uh academic who pointed that out but I forgot name but he pointed out you know China is a uh market economy but not a capitalist country because in capitalist countries Capital controls or has significant influence over uh the political process and that&#39;s what they don&#39;t have the political process governs what the what the economy is doing and not not the other way around but still the economy structured since Deng xaing as a market economy it&#39;s like okay you guys do you guys go compete and the best gets to the top and then you you you you compete further so they use the model and the model is producing obviously now for 30 years it it&#39;s it&#39;s funny to me that it seems so difficult for the West to wrap its head around that which then means if you if you break trading links well the Chinese just GNA figure out how to do it differently because they can because they can yeah you know the the water Finds Its course natural course it will it will move around well you know that that&#39;s a great metaphor I mean we know um you know one of the most powerful forces is in nature is is water because it it&#39;s formless you know it will just change it has its own nature but it finds its own path through gravity and then in freezing conditions it can fracture rocks and move mountains and reduce them to Rubble um and I think it&#39;s you you make a excellent point and if I could now sort of maybe amplify on you know the energy and power transition into what psychologically happens when you have such conditions then I think what you get is the makings of identity crises of different kinds so so these powerful geopolitical forces because politics is involved and let&#39;s remember politics is all about how do I as a politician appeal to voters if I&#39;m I&#39;m in a democracy or if I&#39;m an autocrat leader how do I stay in power by you know not upsetting so many people um that you know that that they forc me out right in a coup or other means whatever means or in in in dynastic China getting poisoned you know something like that um so if you if you think about this issue there is an identity crisis which involves how our psyche how the way we think about the world adjusts to a change that at some point we recognize we can&#39;t control in the west I believe is undergoing an identity crisis about what it means to be Western um if it means anything at all I mean the West is not a homogeneous block I mean you you I think you spend most of your time in Japan is Japan part of the West to me it has always been the most eastern part of the West because it feels like that uh it but it&#39;s also it&#39;s it&#39;s by choice it&#39;s by design the Japanese 150 years ago 160 years ago 70 years ago chose to to like okay let&#39;s let&#39;s decouple from from the continent and just start imitating the Americans and the and the Europeans and it shows today they do it in their own way but it is very much structured like that it life feels different actually in already like in in in in in Taiwan and in Southeast Asia for sure it feels like a a very different vibe but I me in this sense then that&#39;s why Japan I will CM the to the collective West when we put it together although Japan is very very brilliant in uh in making the others believe that it does the same thing while actually doing something completely different flying under the hood again without providing investment advice that&#39;s why we&#39;re heavily invested in Japan yeah because uh they straddle the mountain as it were um they&#39;re able to navigate these different worlds but that brings me to one more another question that hand of my mind earlier but I would like to ask you now is um the the the the the change the geopolitical change is also leading to new it&#39;s leading to restrictions on the one hand in terms of what what what is being traded or what the US would like to see not traded but it&#39;s is leading to new trade flows inside the blocks I mean there&#39;s this whole concept of R sharing and now we are suddenly seeing a Taiwanese critical uh Technologies from the chip manufacturer PMC being they&#39;re building now a factory in Japan you know uh instead of producing locally because they want to diversify the risk of the geopolitical risk that&#39;s it you want to have a planned outside of of of striking range of the still in Striking range of the Chinese but it it might not be a primary target right um and this is now leading to to new to new uh um diversification actually of of of of trading and and using also technology um how do you think that will continue and what will be the impact of this new trading um environment I think it&#39;s it&#39;s really the main game um so there are many that have said uh in this sort of uh era that you might Mark with the first Trump Administration is when it got serious with trade restrictions emanating from the US um that that you know globalization was dead you know all whatever um if you look at the composition of trade so picking up your point about the adjustment of trade flows um globalization is not dead at all in fact it&#39;s continuing um you know global trade as your shair of the global economy GDP I believe is still Rising it&#39;s just that it&#39;s falling in some places and rising in others and one of the major uh effects that&#39;s happening is you know the rebirth of a of the of the nation of an entrepot uh country you entrepot is an old word meaning you know um a place where Traders meet and exchange goods uh and those goods and services they might not actually be manufactured in the trading center um what makes the trading center function is its Central role in trade routes it&#39;s a place where people can be and you see this you can you can always finger these these locations because uh if you look at their external trade the external trade is often a multiple of the GDP so if you looked in finance that would be Switzerland yeah or Singapore and Singapore and goods and finance Hong Kong and you know some people have written Hong Kong off I would say don&#39;t write Hong Kong off it&#39;s going to be resurgent and much more powerful and important in the future for a very simple reason Hong Kong&#39;s a classic entrepot community and has been you know for forever of course there&#39;ve been political troubles there but a good friend of mine said Hong Kong people they don&#39;t care about politics they care about Commerce so so as long as the politicians leave them alone enough they&#39;ll get on with business um and so under this new uh world where if you think about it what&#39;s actually happened is something quite simple it used to be that Hong Kong was where a western multinational went to interface with China which has closed Capital controls so they could do business in China now a lot of those Western firms have left so who will be the new people that come to Hong Kong to replace them it&#39;ll be the mainland Chinese multinationals seeking to escape the capital controls in China that need a dollar basis economy through the Hong Kong Peg to do business with the rest of the world and then manage their repatriation through the capital control system back into the mainland so Hong Kong hasn&#39;t lost its role at all in fact its role is Amplified become even more important so um you know we think that there was a necessary adjustment as people thought well how far is this political repression going to go in Hong Kong when clearly the the Chinese government got concerned that they might have separatist Ambitions or Democratic Ambitions or or whatever right and so they cracked down very hard now it seems to have moderated to the point where well let&#39;s not go too crazy this is very valuable to the Chinese authorities to have Hong Kong as a functioning Center of Trade I think they&#39;ll probably relax a little bit more now because in fact what&#39;s going to happen is Chinese multinationals will be pre pressuring the Chinese government to to relax these controls so they can do business with other countries that pleases the Chinese central government so Hong Kong trading with Brazil Hong Kong trading with you mentioned Hungary Hong Kong trading with Malaysia and Vietnam and Singapore and Australia all kinds of places yeah it&#39;s it&#39;s quite important and again it&#39;s like the stupid narrative from of the West that kind of clouds the the the and that makes you believe that Hong Kong was completely integrated into China and it&#39;s the same now no they still have a special regulatory system that is different from mainland China the one thing China did is it built a little Bridge a legal bridge that makes it possible for them to take out anyone they want who who might be doing like uh separatist movements or whatever that&#39;s all they did but the rest they didn&#39;t actually touch until 2047 or 2049 Hong Kong still has special separate law uh especially govern the the business sector yeah and and so you know if you think about it from the perspective of someone who&#39;s doing business internationally uh you know I&#39;m not I&#39;m not saying um such people should ignore the political situation in Hong Kong or you know not advocate for what they think is um a better way uh for the central government in China to um manage you know the the Hong Kong question right however you choose to frame the question um but but what I am saying is that and it comes back to the power transition yeah what what I&#39;m what I&#39;m identifying with Hong Kong is Hong Kong was important throughout history because of its port and and similarly maau um you know and and we we identify these these two although they&#39;re adjacent we identify them differently because they were historically in the hands of different Mercantile powers that were seeking to use them for trade you know whether it&#39;s Portuguese or it&#39;s the or it&#39;s the British and if we remember how the connection from Hong Kong into mainland China first became prominent it was through the IGN Noble means of of um some some interests you know from what we now called the West um seeking to sell opium into China two Wars fighting two Wars for the right to sell opium to Chinese people yeah yeah so if you reverse sorry go ahead no no please yeah so if you invert that ju Just because we&#39;re now talking about a power transition where China becomes more important in global trade than it was then yeah in terms of trade external to Chinese borders because it was fairly you know it was important trade but not not as big an economy say as it was um as it is now um what I mean to say is Hong Kong had that role then and has played that role throughout history to presume that it won&#39;t play a similar role going forward is to misunderstand why it was ever important yeah to to understand the future of it in geopolitical terms you have to understand which power center is now guiding the future of Hong Kong well undoubtedly that is mainland China in terms of trade why is Hong Kong important because it is the Nexus between East and West it&#39;s the place where a Chinese multinational can do business in Hong Kong dollars which are fungible to US Dollars effectively pegged um and it can use the US dollar for international trade effectively hedge it um and this is why I don&#39;t think that the US dollar will disappear from trade it&#39;s not in China&#39;s interest for that to happen if Hong Kong is their major portal to the outside world uh Chinese multinationals will discount the incoming US Dollars and which are Hong Kong dollars and then use whatever they need to do to repatriate them to Mainland China to pay their taxes and build their factories and do whatever they need to do yeah which which leads me to my the last big question that I want to ask because on YouTube something that we see have been seeing over the last one two years is the buzz word and it&#39;s very popular it&#39;s like dollarization this is the end of the dollar and the world is going to change and uh while I do think yes I mean the end of the Petro dollar and and the emergence of alternative payment systems the alternative to a swift system and trading in local currencies all of this is new and it is significant and it will impact uh trade but at the end of the day the important thing is still that goods are moving and that trade is happening uh the way how it happens to me is somehow secondary while I do recognize I mean it gives the the the US dollar an outsized uh importance so decreasing that will have domestic impact in the United States although I don&#39;t think as huge as as as people think it will um what is your assessment of this change of of well the role of the dollar and the new systems that are apparently being created at the moment yeah look it&#39;s it&#39;s really the huge question for finance um I think firstly we have to recognize that what&#39;s different about the the you know post Britain Woods system we&#39;ve had with with um the US dollar isn&#39;t as you recall initially it was backed by gold and then Nixon took us off the gold standard formally um in I think was 71 uh and and then we moved to Fiat money um but but I I would argue that it was never really a system without an anchor it&#39;s just that the anchor hadn&#39;t been thought out very clearly so what I mean by anchor is a a standard by which you measure the value of a US dollar um and formerly it was it was gold commodity but but if you think about the industrialized West and the post industrialized West where large parts of our economy are Services uh it&#39;s natural that the anchor has been you this relationship between labor cost and the things that labor needs to function Housing Shelter food and that&#39;s why we&#39;ve had this sort of CPI management Consumer Price inflation monetary policy to sort of manage the you know the value of the fat currency to some kind of notional standard which is 2% inflation or whatever now that system is obviously breaking right now it&#39;s breaking in several ways it&#39;s breaking because we&#39;re seeing um cost of living Rises that are leading to extreme political unrest in the United States in Europe and even in Australia um and I think a big reason for that is that the monetary authorities and I don&#39;t wish to um blame anybody for this I just want to make an observation that&#39;s a view mirror observation from history is well illustrated by bringing in Gold into the into the story and I&#39;ll tell you a short version of this story it&#39;s well illustrated by the Australian experience because the Australian dollar we&#39;re a good big gold producer you know um used to be number two I think we&#39;re number three now it doesn&#39;t matter um but we&#39;re historically over the last 150 years been a big gold producer usually in the top three globally now we don&#39;t base our currency on gold but for many years um the Australian dollar was fairly steady in Gold you know for a long period in the 90s it traded roughly $500 an ounce and so if you looked at the real return on um for holding gold in Australian dollars it was was kind of negative yeah um but all of that changed when China entered the WTO so did a small research piece on this and I&#39;ll give you the short version so what happened after and it wasn&#39;t specifically entry to WTO it&#39;s just that China&#39;s trade with the world increased around that time and not only because of that in many ways the reason they entered the WTO was their trade level was Rising um and they needed to normalize okay so if you if you measure the return on holding gold in Australian dollars not US Dollars um since about 2002 when China entered WTO it&#39;s a shocking number the nominal return is between eight and % per anom wow it&#39;s better than a bank account so that ought to tell you that something weird is going on right how come people putting their money in bank accounts when if they just bought a gold bar and left it in basement they would have made more money right and also Australians are are very very keen on real estate real estate numbers for return on investment is about 10% perom over the same period and that ignores the depreciation on holding costs of property um you know because your house depreciate you have to spend money to keep it up rates and all the rest of it so this is very strange how come you know in in in sort of handwavy chart terms Australian dollar gold was doing this up until China entered the W and then it did this and it hasn&#39;t stopped doing that and I think the the reason my reason people will disagree my reason is that actually we were managing our monetary policy to CPI the Consumer Price Index and a big component of the Consumer Price Index in terms of prices was traded Goods coming from China which got cheaper right so imagine imagine your monitoring managing your interest rate saying well as long as inflation is not above 2% we&#39;re fine yeah but one part of that basket is doing this because it&#39;s the goods coming in from China and the other part of the basket is doing this which is housing costs and and rents and which translates to labor costs on average it&#39;s say the same you&#39;ve distorted your monetary policy effectively what you&#39;ve done is you&#39;ve set interest rates too low and you know I use that analogy of water water finds way economics is similar yeah if you set your monetary policy too low in terms of interest rates what will happen is the system will figure it out um and you&#39;ll see inflation in some other area you weren&#39;t watching and that was house prices um and so now our house prices are unaffordable because actually we ran interest rates too low earlier but because we ran interest rates too low because we weren&#39;t taking account of this Cher effect gold noticed that and went up um land noticed that went up real estate which is built on land noticed that and went up sometime after this as as in as as in consumer noticed it and started buying these Goods instead of the other ones which became more more relatively more expensive yeah exactly so so what I&#39;m saying is it&#39;s fairly clear I think when you look at that data and reflect on um the natural consequences of a changing price structure on both labor and goods is that uh you were looking at CPI as an anchor to the monetary system this is the US dollar global system yeah and and you were assuming that your monetary levels were set right whereas in fact in hindsight you probably had your interest rates too low so that accelerated financialization and de-industrialization in these countries the west but at the same time it also elevated housing costs and created this stored up political problem of no one can afford to buy a house if they&#39;re young yeah at some point all these problems Collide at some point we have to talk again because I have this very strong feeling that people uh seriously misunderstand currencies and you know currencies for you as an investor are just another option in within a portfolio right because you are aware that everything traits in relationship to everything else and it just moves up and down it&#39;s not it&#39;s not that everything is anchored to the US dollar and if the US dollar goes down then the others go up it&#39;s just not how it works um yeah and in this sense I I really I really think that there&#39;s this this this mis misunderstanding because people also think that a currency that goes down is a weak currency equals bad but no a jeap currency just means one thing it means that Goods that come from the out get more expensive and your own Goods to the outside get less expensive which means that you will probably end up starting like reshaping your economic structure in order to do more exports Pascal you need a Nobel prize in economics because that is true thank you very much but why is it that a lot of people misunderstand this so actually a cheap US dollar my friends is going to be good for the United States because they restructure over 10 years and become manufacturing Powerhouse they already it&#39;s what I would call a good tariff it has the effect that people want from tariffs so let&#39;s just run that right so look at Japan of course the econom is a bit weak right now but you&#39;ve got this very weak Yen which has made Japanese manufacturing much more competitive yeah yeah and they&#39;re they&#39;re they&#39;re bringing factories back because you know it this is what another fascinating thing I&#39;m not sure if it&#39;s going to go this way but if the Japanese y continues to develop the way it does um then we will for the first time have a cheap labor developed Nation because the develop the development standard inside Japan is superb highest level and if the Yen continues tanking then we&#39;re going to have highest level like developed nation that is going to be you know competing with Vietnam over producing stuff and I don&#39;t know the Japanese name for it but I really want to go up to Japan because I&#39;ve heard about these you know these abandoned homes because everyone wants a new home in Japan and there&#39;s these abandoned homes in the country yeah the population is going down right so the the houses are opening yes and I look at that and I think wow you know except for the immigration Challenge and the Lang language challenge but you know with AI now you can at least use translation to try to you know help yourself communicate um but you know you&#39;ve got all the conditions there for um you know effectively service workers operating in Japan probably serving Japanese clients and also Global clients as a very attractive destination yeah yeah the the only the only thing I must say is like the biggest problem is is regulatory uh the the the foreign population in Japan is below 2% yes of course and they&#39;re not they&#39;re not aiming at increasing it so they have structural barriers um um well yeah yeah yes anyway look there fabulous thoughts and uh I I just want to leave you with that idea that that I think that gold is important once more for the reasons I mentioned because if you&#39;re Chinese or you&#39;re Australian you make more money on holding gold in your basement you do on a bank account that&#39;s what the Chinese are doing they&#39;re buying it Australians haven&#39;t figured it out yet because they&#39;ve got an alternative they go buy housing which is is going to the Moon that&#39;s not going to the Moon in China anymore so by the gold by the gold um Australia housing can&#39;t go to the Moon any closer because no one can afford it so I think gold will become popular again yeah but the big risk with gold is as with any other good if people stop buying it then price will go down again so as long as people keep buying it um anyhow um we went a little bit left and right into the on God&#39;s green earth but I hope everybody that you enjoyed this and I would like to thank uh Dr Kingsley Jones for your time you told me that you have a substack where can people follow you oh uh so the name of the sub substack is savy yabby so yeab is a little crustation in Australia so Savvy savy yabi YB y.com and we have a free newsletter on there and a paid version as well I will uh I will put the links into the description um I really enjoyed the the talk with you uh Dr Jones see you next time thank you very much pescal pleasure being on

Transcript for:Energy Transition and Geopolitics in Global Markets

Transcript for:
Energy Transition and Geopolitics in Global Markets