63: Janus Henderson's Daniel Graña – Regulatory Reform in China, Top Down Analysis and Cuba

[i3] Institutional Investment Podcast

Daniel Graña is a portfolio manager for emerging market equity with Janus Henderson Investors. In this episode of the [i3] Podcast, we spoke about the importance of top down analysis in emerging markets, regulatory change in China, the influence of the pandemic on the region and on his investment process, and nationalising local hardware shops in Cuba. Please enjoy the show. Overview of podcast with Daniel Graña, Janus Henderson Investors 1:30 My family’s past in Cuba shaped my interest in emerging markets 2:30 Starting as an investment banker 3:30 Does your background give you a different view on geopolitical events? 4:00 What my developed market counterparts have realised since the global financial crisis is that the top down matters. 6:30 State or regulatory interference 7:30 What has happened in China in the last several months is a stark reminder of if you don’t place these sort of political governance and top down considerations front and centre, then you are going to be surprised. 8:00 If you want to invest purely bottom up, then I think you shouldn’t be invested in emerging markets 9:00 Why invest in emerging markets now? US equities seem to do better. 11:00 China and electric vehicles. 12:00 Innovation is key to escaping the middle income trap 13:00 Emerging markets with lower income disparity weathered the pandemic better 14:00 Future mutations of the coronavirus will come from emerging markets 15:30 COVID-19 didn’t change my process, but it did evolved the questions we were asking 16:30 We had to make some hard decisions on companies with business models that do well in a pandemic 17:30 The pandemic caused consumer to try home delivery, where they might have still taken years to adopt this practice without COVID-19 20:00 I think more of people’s behaviour is going to change as a result of COVID-19 than people appreciate 21:00 The internet could provide opportunities to SMEs to increase B2B sales 24:30 Since WWII there have only been five countries that have successfully transitioned from low to high income countries. 25:30 China has entered a period of regulatory bombardment; lots of micro reforms 26:00 We have failed to regulate big tech in the West 28:00 Three key themes in China: technology enabled businesses, decarbonisation and health care 29:00 The biggest story to come out of 2020 is COVID-19, but the second biggest story is China’s commitment to carbon neutral by 2060 33:00 The scorecard has changed to now include decarbonisation measures 34:30 I was wrong on the business impact of social media 36:00 Some of my best investments have been figuring out where there would be a change in governance for the better