EMQQ Global Founder on AI Opportunities in China & ETFs Adding Exposure

Schwab Network (0:00)

And joining me right now, Kevin Carter, founder, Chief Investment Officer, EMQQ Global. Thank you so much for being with us. So that's a wrap.

President Xi is on his way out of Washington. We've had a very busy week. They've extended that trading truce now from November 10th to January 10th. Some discussions and a big tech CEO dinner. What did you think? What were your takeaways?

Kevin Carter (0:26)

Well, I think there was not much material or substantive news out of the event. It is notable that there were essentially no Chinese corporate executives at the dinner. It looked like it was filled with US tech leaders. But certainly the AI dialogue continuing, I think was probably at least from what we're up to, the most important part.

Schwab Network (0:54)

Why is it so important that there were no China corporate leaders there? Should he have brought some with him to extend an olive branch of some sort? How would that have helped?

Kevin Carter (1:07)

I don't know that it would have helped. It was just a notable difference in this meeting versus past meetings.

Schwab Network (1:15)

Yeah. No, I think it was worth saying. I just wanted to see if there was something more to it. We had about 100 CEOs there. I'm sorry, 27 CEOs and certainly plenty of people. In the meantime, and all those tech CEOs. Let's talk about the big picture here now in the global AI story, because you have in your portfolio an AI theme and a China theme too.

Kevin Carter (1:38)

Sure. Yes. Well, we launched the AICH, the China AI ETF last week.

Ultimately, at a big picture, one of the things about the AI story is it brought emerging markets back into relevance. You have in Taiwan and Korea, the hardware makers that have been doing quite well. But the real race, which I don't like to call it a race or a battle or anything like that. But if you want to use the term, the race is between the United States and China. And China is leading in some ways and the US is leading in others. And it's not going away. It's gonna be a big story for a long time.

Schwab Network (2:21)

So where does AICH fall in here? Tell us a little bit about the China AI ETF.

Kevin Carter (2:28)

Sure, well, the fund invests across the whole stack of AI, which is power, chips, data centers, the AI models, you know, the open AI and cloud competitors from China, the open source, open weight models.

And then finally, the application layer. And the application layer is still in its infancy, I think. In the US, we saw the meta news this week, which was one of the more important milestones in terms of people actually seeing what the application layer is for AI.

Schwab Network (3:04)

And then when it comes to the TGRS, the Tigers, China AI Tigers LLM ETF, tell me about that one and how it differs.

Kevin Carter (3:15)

Sure. Well, TGRZ, the Tigers, is focused just on that model layer. Because if you think about AI, before AI arrived, we had power, we had data centers, we had chips, we have lots of phone-based applications. But the model layer is the magic layer, as Jensen likes to call it, and that's the real AI layer. Again, we have CHAT GPT, we have Claude, we have Gemini. China has its own, and this is really the tip of the spear of the China-US AI race.

What makes the China models of interest is that, first of all, they're open-weight, and this is a big importance to the users. You can download the models. You can't download Claude. You can't download open AIs, CHAT GPT. So the China models are open, which means they can be downloaded and run on your own computers with your own data intact, and they can be customized. On top of that, they're getting better and better, and some think they may catch up. They've certainly caught up. There's questions about whether they may pass us, and they're also a fraction of the cost. That's why the majority of US startups are using China open weight models today.

Schwab Network (4:38)

Yeah. Well, it's great to speak with you, Kevin. I know that you've been a leading EM investor for well over a decade, so I really appreciate your insight today.

Thank you, Kevin Carter, founder, chief investment officer, EMQQ Global. And if president Xi comes back or they have some sort of meeting, I should say in November, we'll have to circle back on this conversation again, too.