Short Briefings on Long Term Thinking - Baillie Gifford Baillie Gifford

Emerging markets have sometimes promised more than they have delivered, but circumstances may be tipping in growth investors’ favour. Will Sutcliffe, head of our Emerging Markets Team, explains why it’s an opportune time to invest in the asset class. Background: Will Sutcliffe is the head of Baillie Gifford’s Emerging Markets Team and co-manager of our Emerging Markets Leading Companies Fund. In this episode of Short Briefings on Long Term Thinking, he brings his 23 years of experience in the field to explain what makes the specialism different from other types of growth investing. He makes the case that finding exceptional growth companies at attractive valuations is only part of the equation. Investors must be mindful of the broader macroeconomic environment, he explains, to avoid getting caught out by currency swings or spiralling debt costs. This leads him to conclude that recent resilience in emerging market economies could point to a favourable outlook for the asset class’s growth stocks. All this only matters to our portfolios if there are exceptional businesses to invest in, and Sutcliffe argues that the emerging markets are home to an increasing number of world-class companies. They range from the Taiwanese chip maker TSMC to the energy, retail and telecoms conglomerate Reliance Industries. Resources: Emerging markets: why bother? (https://www.bailliegifford.com/insights/ic-article/2023-q3-emerging-markets-why-bother-10040076)Stock story: Pinduoduo (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-video/2024-q1-pinduoduo-stock-story-10044944/)South-east Asia’s rising export stars (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-article/2023-q4-south-east-asia-s-rising-export-stars-10041012/)Jio Financial Services (https://www.jfs.in/)Natura (https://www.naturaeco.com/)PDD Holdings (https://investor.pddholdings.com/)Pinduoduo (https://en.pinduoduo.com/)Reliance Industries (https://www.ril.com/)Temu (https://www.temu.com/about-temu.html)TSMC (https://www.tsmc.com/english)Gabriel Garcia Marquez: Until August Timecodes:00:00    Introduction01:45    Joining the Emerging Markets Team03:15    A ‘terrifying’ baptism of fire05:00    Emerging markets’ ‘dirty little secret’05:45    Qualifying for emerging markets status06:45    Higher-calibre companies08:00    Macroeconomic resilience09:30    US-China tensions and Russia’s invasion of Ukraine12:00    Investing in China13:45    PDD Holding’s Pinduoduo and Temu

A new medicine that can help patients lose 15 per cent of their body weight could have far-reaching consequences for healthcare. Wegovy mimics a hormone the gut releases, reducing appetite and slowing digestion to delay hunger’s return. Research is also underway into other potential health benefits. In this podcast, Baillie Gifford investment manager Ross Mathison discusses its maker, the Danish pharmaceuticals manufacturer Novo Nordisk, which became Europe’s most valuable company in 2023. Background:Ross Mathison is an investment manager in our Global Income Growth Team, co-manager of our Global Income Growth Fund and deputy manager of the Scottish American Investment Company (SAINTS). In this episode of Short Briefings on Long Term Thinking, he discusses how medicines that mimic the glucagon-like peptide-1 (GLP-1) hormone could help tackle the growing problem of weight gain. Forecasts suggest that by 2035, more than half the world’s population will either be overweight or obese. That’s likely to lead to more people suffering associated diseases, putting health budgets under further strain. Novo Nordisk initially researched GLP-1s as a diabetes treatment. The company is the world’s biggest insulin producer, but it’s the release of its weight-loss drug Wegovy that’s transformed its growth prospects. News that medical trials suggest that the therapy could also reduce the likelihood of heart attacks, strokes and other cardiovascular threats among some patients has driven further investor interest. Mathison explains that there could be further health benefits beyond this, how even more effective treatments could follow and why Novo Nordisk’s manufacturing edge and connection to the world’s biggest charitable foundation bode well for its future. Resources:New England Journal of Medicine: Semaglutide trial (https://www.nejm.org/doi/full/10.1056/NEJMoa2032183)Novo Nordisk cardiovascular trial press release (https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=166301)Novo Nordisk kidney trial press release (https://www.novonordisk.com/content/nncorp/global/en/news-and-media/news-and-ir-materials/news-details.html?id=166327)Novo Nordisk Foundation (https://novonordiskfonden.dk/)Wegovy (https://www.wegovy.com/)World Health Organization obesity factsheet (https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight)Hitting Against the Spin Timecodes:00:00    Introduction1:40      What are GLP-1s?4:00      Scientific breakthrough5:05      Obesity: a disease, not a choice6:45      Novo Nordisk’s drug, Wegovy08:10    Prescription costs

What distinguishes companies that will thrive from those that will perish? In this episode, we explore three traits that mark out the companies set to surge ahead from those more likely to struggle: 1.      They solve real-world problems2.      They are financially strong and disciplined3.      They are highly adaptable Baillie Gifford partner Tim Garratt discusses these characteristics, gives examples of companies that exhibit them and explains why this feels like a once-in-a-generation opportunity to be a long-term growth investor. BackgroundTim Garratt is an investment specialist, overseeing the institutional clients who invest in our Long Term Global Growth strategy and leading our broader client specialist network. He recently co-authored the paper Why growth, why now?, which reaffirms our beliefs about how growth investing can generate attractive returns.In this episode of Short Briefings on Long Term Thinking, he discusses how interest rate rises, restricted amounts of capital and geopolitical tensions are causing a stock market shake-out. And he explains why this plays to the advantage of patient investors who focus on the fundamentals when picking growth stocks. Garratt gives examples of how companies, including Netflix, Roblox, Shopify and Amazon, fulfil the criteria we seek. And he explains how Baillie Gifford itself is adapting to the times, exploring the use of machine learning and other tools to hone our investment process.Resources:Why growth, why now? (https://www.bailliegifford.com/literature-library/insights/why-growth-why-now-10041062/#page=4)We’re all climate hypocrites now (https://newsociety.com/books/w/we-re-all-climate-hypocrites-now)See & Spray (https://www.deere.com/en/sprayers/see-spray-ultimate/)Netflix engagement report (https://about.netflix.com/en/news/what-we-watched-a-netflix-engagement-report) Timecodes:00:00        Introduction1:30           From abundance to limitation03:45        Implications for investors05:20        Real world problems: supply chains07:30        Deere and hi-tech farming09:00        Financial strength and discipline09:50        Netflix and pricing power12:00        Keeping watch on margins14:15        China’s electric vehicle makers16:15        Adaptability and new business models16:50        Roblox adds AI19:30        Microsoft, Amazon and environmental costs21:45        Sea and the importance of culture23:00        How Baillie Gifford is adapting25:05        ‘Why now?’ for growth investing26:55        Book choice

Show notesAmazon and DoorDash take different approaches to bridging the physical and digital worlds. Amazon has built an extensive infrastructure of warehouses, logistics ne...

China became known as the world’s factory thanks to it offering companies a way to manufacture all kinds of goods at a high quality and relatively low cost. But in recent years, south-east Asian nations, including Vietnam and Indonesia, have begun challenging it for that status. Baillie Gifford investment manager Ben Durrant recently returned from a tour of the region. He discusses some of the long-term growth opportunities he unearthed on his trip. BackgroundBen Durrant invests on behalf of the Pacific Horizon Investment Trust, the Pacific Fund, and our Emerging Markets Equity Team. In this latest episode of Short Briefings on Long Term Thinking, he explores the factors that led China to become the world’s leading exporter and how its move up the value chain is now creating opportunities for other south-east Asian countries to grasp. Durrant reviews some of his most memorable encounters in Vietnam, Indonesia, Malaysia and Thailand and reveals which growth companies excited him the most. They include businesses using mined metals to make car batteries, banks serving populations with growing spending power and, perhaps surprisingly, one of the world’s leading catfish exporters.Resources: The Indonesian companies powering the green transition (https://www.bailliegifford.com/insights/ic-article/2023-q1-trust-46-why-indonesia-matters-10019268/)Ben Durrant LinkedIn page (https://www.linkedin.com/in/btgdurrant/)How Asia Works (https://groveatlantic.com/book/how-asia-works/)How the World Really Works (https://www.penguin.co.uk/books/319141/how-the-world-really-works-by-smil-vaclav/9780241989678)Past podcasts (https://www.bailliegifford.com/podcasts/) Timecodes:00:00        Introduction01:30      China’s success as a low-cost exporter03:15        Land reform’s role04:00        Good quality, low-cost labour05:45        South-east Asian countries’ advantage07:15        Vietnam’s growth opportunity09:30        Vin Hoan: exporting catfish11:45        Sourcing local insights13:30        Indonesia’s move up the value chain16:15        Clusters of expertise in Malaysia18:00        Looking beyond tourism in Thailand20:15        Moving up the value chain22:15        The attraction of growth investing in southeast Asian23:15        Paying attention to macroeconomics24:30        Book recommendation Follow us via:Twitter (https://twitter.com/BaillieGifford)LinkedIn (https://www.linkedin.com/company/baillie-gifford/) Companies mentioned include:FPT (https://fpt.com/en)Hyundai (https://www.hyundai.com/)Samsung Electronics (https://www.samsung.com/)Vinh Hoan (https://www.vinhhoan.com/)

Is the time ripe for Japanese growth stocks? Donald Farquharson is Baillie Gifford’s head of Japanese equities and knows the market better than most. In the latest episode of Short Briefings on Long Term Thinking he draws on a recent visit to the country to explain why conditions seem favourable for a cohort of domestic companies with long-term mindsets. Background There’s a sense of renewed confidence and enthusiasm in the air in Japan. The country is home to the world’s second-largest market for equities after the US, but it doesn’t get a corresponding degree of attention from international investors. The reason is partly because of the nation’s past weak economic performance. But a recovery is underway, and critically, many of its growth stocks have strong balance sheets, big ambitions and a positive story to tell. In this episode, Baillie Gifford partner Donald Farquharson draws on his experience of investing in Japan since 1990 to explain why he’s particularly optimistic about the opportunities ahead for a select group of companies. They include the medical equipment maker Olympus, the car components manufacturer DENSO and the takeover advisory service Nihon M&A Center.He also shares why he thinks some misunderstand Japan and why it’s no coincidence that many of the companies he backs are founder-run.Resources: Discovering the unsung superstars of Japanese technology (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-article/2023-q3-trust-47-tomorrows-tall-trees-10035561/)From Yahoo! to Z Holdings: the evolution of an online pioneer (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-article/2023-q1-from-y-to-z-10019475/)Japan: the small businesses with big opportunities (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-article/2023-q1-japans-smaller-stars-10018820/)Investing in Japan: distance lends perspective (https://www.bailliegifford.com/en/uk/individual-investors/insights/ic-article/2022-q4-investing-in-japan-10017089/)Donald Farquharson’s LinkedIn page (https://www.linkedin.com/in/donald-farquharson-74aba528/?originalSubdomain=uk)Aiming High: Masayoshi Son, Softbank Group and Disrupting Silicon Valley (https://www.hachette.co.uk/titles/atsuo-inoue/aiming-high/9781529338614/)Past podcasts (https://www.bailliegifford.com/en/uk/individual-investors/short-briefings-on-long-term-thinking/) Timecodes:00.00      Introduction01:40        Investing in Japan in the 1990s03:00        ‘Undiscovered’ Japan03:55        How banks and other businesses changed05:30      A sustainable recovery?06:45        An exciting time for growth companies07:45        Strong balance sheets08:15        Olympus and endoscopes09:45        Diversity on the board11:00      Nihon M&A Center and company takeovers12:50        DENSO, a major supplier to Toyota and others14:30        Toyota City, home to one million people15:35        Competition for car batteries16:30      Baillie Gifford’s advantage in Japan17:45        Looking beyond the headlines18:20      Book recommendation: Masayoshi Son and Aiming High19:45        Investing in founder-led firms Follow us via:Twitter (https://twitter.com/BaillieGifford)LinkedIn (https://www.linkedin.com/company/baillie-gifford/)Email (https://www.bailliegifford.com/en/uk/individual-investors/email-sign-up/) Companies mentioned include: