15 Stocks That Don't Need a Trade Deal to Reward Investors

THE DOW JONES BUSINESS AND FINANCIAL WEEKLY www.barrons.com NOVEMBER 1, 2019

COVER % China Roundtable: 15 Stocks That Don’t Need a Trade Deal to Reward Investors The following has been excerpted

By Reshma Kapadia ons, and offer insights into their favorite important, China was acting more assert- Chinese stocks in the edited Roundtable ively as a geopolitical rival. Now, there is China’s economic slowdown, its trade transcript below. The group includes Ar- no consensus on our stance against China. dispute with the U.S., and pro-democracy thur Kroeber, founding partner of China David Semple: The narrative has hard- protests in Hong Kong have dominated research firm Gavekal Dragonomics, who ened politically and probably on Main the news this year. Yet, for all this turmoil, splits his time between New York and Bei- Street against China. We might not have Chinese stocks have done remarkably well. jing; Winnie Chwang, co-manager of the consensus, but it’s not moving in a good The Shanghai Composite index, home to $796 million Matthews China fund (ticker: direction. stocks bought mainly by domestic inves- MCHFX); Lewis Kaufman, manager of tors, has returned 19% in U.S. dollars, the $2.7 billion Artisan Developing World What does this mean for investors? while the Hong Kong–traded Hang Seng Strategy and David Semple, manager of Winnie Chwang: China has already piv- index, whose shares are favored by foreign the $2 billion VanEck Emerging Markets oted to a services- and a consumption-led investors, is up 10%. fund (GBFAX). economy. Net exports have dipped below The members of Barron’s China Round- 1% of gross domestic product, so China has table offer an easy explanation for these Barron’s: Let’s tackle the 800-pound more incentive to get its own economy right. and further gains: China’s domestic market panda in the room. What is the out- Increasingly, people on the ground in is enormous and growing rapidly, fueling look for U.S.-China relations? China feel the trade war isn’t a bad thing. demand for education, life insurance, me- Arthur Kroeber: The relationship is un- It’s like a wake-up call. China has been too dia, sportswear, and baijiu, the famously dergoing a very important reset. For a reliant on foreign technology for too long. fiery national liquor. And it isn’t just big long time, there was a consensus among We are optimistic on outcomes from a trade spenders in Beijing or Shanghai who are U.S. policy makers on China: that it was in war. But even if the trade war goes away, scarfing up services and stuff, but increas- the U.S. national interest to enable China’s it won’t stop China’s intent to ramp up its ingly consumers in smaller cities that are economic rise, to encourage China’s inte- own technology know-how. home to roughly the population of the U.S. gration into global institutions, and to in- That’s a big trend: the gradual substi- No one is dismissing the risks: The re- crease integration of the U.S. and Chinese tution of domestic technology for foreign lationship between the U.S. and China is in economies. This was a hardheaded calcu- technology. For example, historically, high- flux, driven by China’s rise as an economic lation: China clearly was going to be big, end industrial components were imported. power and what U.S. Secretary of State it had a different system, and it would be But with the ongoing trends to promote Mike Pompeo called “competing ideologies important to influence China’s behavior— localization of technology, AVIC Jonhon and values” in a speech this past week. The and minimize the risk of conflict between Optronic Technology [002179.China], for current manifestations of this tension in- the U.S. and China by making the cost of instance, which makes industrial compo- clude U.S. tariffs on more than $360 billion conflict too high. On top of that, there was nents, could benefit from market-share of Chinese goods—with the possibility of a perception that China was a gigantic growth in areas where foreign represen- more on the way, notwithstanding recent market that would be beneficial for U.S. tation is still high. Many stocks that fall optimism in both countries about a poten- companies to get a piece of. within this theme have seen significant tial initial trade deal. Investing in an au- That broke down a few years ago be- price appreciation without the ability yet thoritarian state also entails potential dan- cause American businesses were complain- to deliver profits. Profitability may take gers, as does China’s opaque debt market. ing that they were facing a more difficult awhile, since it is expensive to rev up tech- Our four panelists put these risks in environment due to intellectual-property nological capabilities and it requires in- context, explain why China’s market beck- theft and market-access barriers, and more vestment.

(over please)

The Publisher’s Sale Of This Reprint Does Not Constitute Or Imply Any Endorsement Or Sponsorship Of Any Product, Service, Company Or Organization. Custom Reprints 800.843.0008 www.djreprints.com DO NOT EDIT OR ALTER REPRINT/REPRODUCTIONS NOT PERMITTED 56929 Valerie Chiang for Barron’s or two. of theworldwe liveinoverthenextyear That isgoingtobeasignificant component to restricttechnologyandfinance toChina. [Trump] administrationtofigureoutways of noise andefforts by hardliners in the string Chinainotherways. There isalot measures bytheU.S.toconfront orham won’t prevent a whole host of aggressive and willbenarrowlyconstructed.Italso much macrosignificance.Itispricedin Kroeber: A tradedealisn’t likelytobeof hovering overtheglobaleconomy? soon. Willthatremove theuncertainty Jinping willsignaninitialtradedeal ident DonaldTrump andChina’s Xi There isgrowing optimismthatPres amount they getting question are tized—but for China’seconomy? barrons.com/mailbag. and wemaypublishyourtake.Findoutmoreat T K Kr has [RCO.France]. amount they are getting question tized—but barrons.com/mailbag. and wemaypublish yourtake.Findoutmoreat for China’seconomy? T K Kr has [RCO.France]. aufman aufman ell ell oeber: oeber: Congress passed legislationin August huge huge come come Us Us do, do, W W people people of

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a a - - .” .” - brand, [primarily] in one country, and has a [MOMO], a live-streaming company with a clinics in Brazil, who cares? The stimulus market cap of over $200 billion. That helps growing online-dating business similar to has been drip-fed, aimed at engendering frame the size of China’s consumer market. Match Group’s [MTCH] match.com. consumption in China. If you have focused Kroeber: There are about 118 million Chi- Semple: China is the epicenter of e-sports on domestic demand in China, not only are nese households with income of at least and we are just beginning to scrape the you not being significantly hurt by tariffs $20,000. This is the group that drives con- surface of monetization. We own HUYA but you are benefiting from the stimulus. sumption for durables like cars, but also [HUYA], a recent listing that is part of the Kaufman: Countries like South Africa, services like education, financial services, Tencent [700.Hong Kong] stable. There is Turkey, Mexico, Brazil, and Russia, which health care, and overseas tourism. Even if also mukbang, online broadcasts of people we would have invested in significantly we assume GDP growth slows to 4%, that binge eating. I don’t understand it either, years ago, are a smaller part of the portfo- population is going to rise 50% by 2025, so but I do understand how powerful and pop- lio. We are more focused on scalable busi- the addressable market for buying high- ular it is in China. ness models and opportunities with inher- er-end goods and services is already large ent scale themselves, akin to the Chinese and going to grow larger. What will happen to consumers’ appe- mass market. And we own a wider set of Kaufman: Affordability is very important. tite for spending as China’s economic multinationals. Years ago, we might have What is unique about China among emerg- growth slows? Does it matter if the bought only Colgate-Palmolive [CL] or ing markets is that a substantial part of economy is growing at 5% instead of Unilever Group [UL]. As China becomes the population can afford things they want. 6%? wealthier, we are able to invest in a com- You marry those wealth increases with the Chwang: Investors in the U.S. don’t ob- pany like Nvidia [NVDA], which can bene- size and scale of consumers and you can get sess about U.S. GDP growth. We focus fit from the cloud and data-center buildout very attractive equity returns. more on labor and wage growth, which in China. We are also seeing a greater re- are still trending well. The Chinese gov- silience to some businesses; LVMH Moë How can investors capitalize on these ernment is messaging more and more that Hennessy Louis Vuitton [MC.France] has trends? 6% isn’t that bad. Look at the size of the become a core position as its mainland Semple: Anta Sports Products [2020. economy. If the job market is looking de- store base and online presence made the HongKong] is really interesting. Anta [Chi- cent and wage growth and retail sales are business less subject to the whims of travel na’s largest sportswear retailer] develops still at 7%, everything is OK. We don’t need spending. its own brands. It [bought] the rights to to aggressively stimulate: That’s the new Fila in China, and has a stake in Finland’s mentality. What do U.S.-China tensions mean for Amer Sports, which owns Arc’teryx, Sa- Kaufman: Many emerging markets get the growth prospects of global com- lomon, Wilson, and Atomic—great brands stuck in the “middle income” trap when panies in China? with big international but non-China ex- they face either slowing population growth Kaufman: For all my enthusiasm for the posure. We await their December meeting or higher labor costs. What makes China domestic potential of China, we have taken to hear their plans for developing those unusual is its abundance of skilled labor. In [money] out of China over the past year brands in China. Of course, the Olympics 1996, 2% [of the population], or 20 million and made changes in our multinational are coming up [Beijing will host the 2022 people, had some form of higher educa- company holdings. We saw with the NBA Olympic Winter Games]. The expansion in tion. Today, it is 14%, or 200 million people. situation that Chinese consumers can have ski resorts in China is unbelievable. Combined with the size and scale of the a different view quite quickly of American Chwang: On average, Chinese consum- Chinese consumer opportunity, and in an brands, which is why at the moment we ers are looking at their smartphones six environment where GDP growth—or even prefer [non-U.S.] companies like LVMH. hours a day. They are glued to the online consumer growth—slows, China has the [A tweet in October by the general man- ecosystem, spurring a flourishing array of potential to transcend constraints in a way ager of the National Basketball Associa- services. The way to capitalize on this is you can’t do anywhere else. tion’s Houston Rockets in support of Hong through lower-tier cities, which are shap- Kong protesters ignited a backlash in ing up to be the next growth engine for Debt is a persistent concern with re- China.] China. [Beijing] is trying to reverse the gard to China. Will the country’s high Semple: You poke the nationalist beast— urbanization trend. More young people debt levels become more of a problem we have seen it before for Korea and Tai- are willing to return to their hometowns. as growth slows? wan—and it can be pretty awesome. You First, they don’t have to deal with the 9-9-6 Kroeber: China’s gross debt to GDP is have to be careful. culture—working from 9 a.m. to 9 p.m. six 260%, extremely high for a developing mar- Kroeber: Investments by U.S. multination- days a week. The pace of life is more bal- ket. That is a significant constraint on the als in China didn’t decline despite the trade anced, and there is a lot of connectivity. government that didn’t exist in the past, war. We have yet to see if the NBA sus- China has rolled out massive railway infra- when [Beijing] threw a mountain of money tains material losses. Chinese people love structure, allowing you to get from Shang- at the economy every time it slowed. [The the NBA and there is no substitute. That’s hai or Beijing to any Tier 3 or Tier 4 city in debt] is one of the reasons we haven’t seen true of a lot of U.S. brands. You have to a couple of hours. more active stimulus as the economy has look at the risk, but I’m less concerned. slowed recently. The government is going In the NBA case, the government moved How big are these lower-tier cities? to keep its foot off that accelerator. That is pretty quickly to tamp down the furor; the Chwang: There is no clear definition. I an issue for the rest of emerging markets, leadership realizes it is an unpredictable estimate 300 million to 400 million people. because for the past 20 years, they have tiger and not in their interest to stoke it. The other thing is affordability, with hous- lived off China’s stimulus. ing prices much lower in these cities. Low- Semple: If you are in Australia export- Xi has taken a more authoritarian ap- er-tier-city individuals—mostly millennials ing iron ore, you have to be worried that proach during his tenure. What is the glued to phones—are more likely to engage stimulus isn’t what it was before. But if risk for investors? in leisure and entertainment like e-sports. you are doing microlending in Indonesia, Kroeber: Xi has put the brakes on what One company that could benefit is Momo taxi financing in South Africa, or medical had been a very long trajectory of a shrinking and refinement of the state’s role in novation, but in hardware a lot of intellec- Good Doctor [part of Ping An Healthcare the economy. The private sector in China tual property is still in the hands of foreign and Technology [1833.HongKong] are ad- is alive and well and not going anywhere, multinationals. dressing it with telemedicine. It gets a lot but the state’s share of the economy is no Kroeber: The number of areas in which of business from the insurance company. longer shrinking. It is basically stable. The Chinese technology is ahead of that in In our view, you aren’t even paying for the question—over a 5- to 10-year horizon—is the U.S. is close to zero. Equity investors life-insurance business. There is a lot more if a shift toward more emphasis on state should ignore the question of who is win- upside. ownership and control ultimately acts as ning the artificial-intelligence race. What Chwang: Everyone owns property, and a slow-acting cancer that makes the econ- matters is the rate of technological prog- affluence levels have risen, so people are omy less dynamic. The jury is out, but it ress and how that is translating into com- more concerned about whether the family is a bigger risk under Xi than any of his mercial opportunities—and that has been is cared for. And China is on the cusp of predecessors. extremely rapid. writing proper insurance, which has higher profitability than investment-linked prod- What does that shift mean for inves- Alibaba Group Holding [BABA] and ucts that were common in the past. The tors? Tencent have been at the center of bank is finally showing glimmers of a turn- Semple: The political control really hasn’t some of that progress. What’s ahead? around. It was previously a regional bank translated into a systematic increase in Chwang: Regarding Tencent, we have seen and had all the problems that come with regulatory control that would make China weakness in advertising in the past two that. With Ping An’s backing, there’s a lot “uninvestable” in any sense. There are years with the rise of [rival] ByteDance. more diligence about asset quality. They always heightened regulatory risks in a But in terms of user engagement and how are writing better loans and able to cross- country with a lack of clarity in many ar- much Tencent is monetizing timeshare, it sell, and have a much stronger customer eas. The government is also gradually ex- is still low and there is room for upside. base in higher-net-worth clients that really iting certain areas, creating opportunities In fintech, Alibaba’s AliPay and Tencent’s helps. for private players, as in funeral services, Tenpay each has roughly a 50% market Kaufman: We prefer AIA because of the where we own Fu Shou Yuan International share. Both are on the cusp of monetiza- lack of bank exposure. AIA has premium Group [1448.Hong Kong]. tion. On average, Tenpay charges 10 to 60 protection products and a real competitive In other areas, there is less state involve- basis points [for payments]. Just one or advantage, having been in China with con- ment. For example, China Education Group two incremental basis points will mean a trol of a joint venture and trained agents. Holdings [839.HongKong] effectively does lot for their bottom line, given the sheer roll-up M&A [mergers and acquisitions]. It volume of transactions. Is the risk from the Hong Kong pro- is in tertiary [post-high-school] education tests priced in? only, where the government wants to en- What is the outlook for Alibaba? Kaufman: We’ll see. Capital can leave courage private enterprise. Chwang: The take rate is hovering around Hong Kong easily. It is harder for people 3% to 3.5%, so when they sell $100 worth of to leave. We aren’t worried about the im- As Winnie notes, China is also invest- merchandise, they take $3 in commissions, minent demise of AIA’s franchise in Hong ing aggressively to become less reliant ad revenue, and such. That’s much lower Kong. on foreign tech. Where does that cre- than at Amazon.com [AMZN], which takes ate opportunities? probably closer to 20%. Alibaba also has What is your most contrarian holding? Semple: If you get a bifurcation of sup- a sizable cloud business. I don’t think Al- Chwang: JD.com [JD]. We held on even ply chains and state-sponsored capitalism ibaba will reach Amazon’s cloud operating when the company was losing money be- throwing money at, say, memory chips, that profit margins of about 20%, given that the cause we felt there was value in the logistics might be good for China in the long run. software business in cloud computing in business. Alibaba has chosen to outsource But the investment side is more challeng- China is still quite young, but Alibaba has a logistics. JD.com has told us they can reach ing. 50% market share and is just beginning to roughly 95% of China’s population in un- Chwang: It creates opportunities because turn that business around. If you exclude der 24 hours. That is remarkable because you can invest now in companies being the companies’ [investment] holdings, Ali- China has a lot of metropolitan densities. given a chance to ramp up quickly. China baba and Tencent are both trading in the The complexity of getting there is quite is luring overseas-trained talent—or “sea high teens on forward earnings. To us, that amazing. UPS [UPS] is trading at a $100 turtles”—back. There is still a lot of bu- is very attractive. billion market cap on a much smaller pop- reaucracy in the U.S. and more flexibility ulation base. We are finally seeing signs [in China] from a research standpoint, and Many of you own AIA and Ping An In- of a diminished logistics drag, particularly researchers can drive their agendas and surance. Why is the insurance business because the company has said it doesn’t projects quicker. appealing? need to invest any more. Increasingly, the Kaufman: China is ideally situated to Semple: Ping An Insurance Group [2318. unicorns [billion-dollar startups]—not just capitalize on this transition because of an HongKong] is head and shoulders above JD.com, which is beyond a unicorn—are ecosystem for innovation that includes a the other Chinese insurers. AIA Group becoming more diligent about profitability. large, skilled talent pool, and the ability [1299.HongKong] is, too, but it has a little to finance businesses domestically. Other wrinkle now because it gets a lot of busi- JD.com’s stock is up 50% so far this emerging markets are dependent on for- ness from Hong Kong. With Ping An, you year, so it isn’t doing badly as a con- eign capital for their growth. get life insurance, a fintech operation, and trarian pick. How about you, David? a bank the company has done a decent job Semple: We’re investors in Tencent Music Some observers think China is ahead of turning around. They also have an abil- Entertainment [TME]. A lot of naysayers of the U.S. in important technologies. ity to leverage business across the Ping An believe there is an awful lot of competi- True? ecosystem. For example, in China the wait tion, and there is. Tencent Music’s ability Chwang: China is miles ahead in software, time to see a doctor can be hours. There is to monetize may be questionable as people where it is more about business-model in- an unmet need, and companies like Ping An look at Spotify Technology’s [SPOT] music-streaming service, which has struggled. the backdrop of all this trade rhetoric, mar- the road, but they recognize that everyone But the power of the music publishers is kets haven’t really corrected. is going to have to get used to a slower much less in China, and the power of Ten- Kaufman: There are different dimensions growth environment long term. The gov- cent is much better. I can see how people of undesirable risks. In the U.S., we have ernment wants to be very careful about get into the habit of paying for music. It some of the more Draconian measures doing anything that causes a return to the isn’t without its risks. Tencent is cheap floated around American depositary re- leverage party of 2012 to 2017. That acts as relative to a company like Spotify, which ceipts of Chinese companies. In Hong a constraint. doesn’t make any money. Kong, the protests can affect companies Chwang: Our long-term risk to the econ- Kroeber: Streaming music and streaming owned by Hong Kong institutional in- omy is property. Near term, we are con- video are huge in China and basically to- vestors. And in the mainland market you cerned about sentiment risk, which can tally unmonetized—but not unmonetizable. have domestic institutions providing sup- weigh on the economy in the forms of less There is still a question of who is going to port. Some degree of diversification makes willingness to hire, lower capital expendi- crack the code of getting people to pay for sense. ture, and derivatives of that. If you are a this content. When they do, that is going to multinational, you are a little bit more cau- What are the biggest risks for inves- be a spectacular amount of money. tious. And if you are a local company cater- tors in China? Kaufman: We like Remy Cointreau [RCO. ing just to the domestic economy, things Kroeber: Cyclically, we are seeing a slow- France]. The premium cognac company down in nearly every economic indicator, are OK but you are cautious, as well. We has come under pressure recently because including consumer spending. China is just want to make sure things aren’t dete- of some de-stocking in the U.S. ahead of probably heading toward a new normal riorating further. tariffs, and also because of the weakness in of growth—more in the 5% range. The Kaufman: I worry about our ability to in- Hong Kong. It’s a supply-constraint story question is how it is managed. The big- vest in U.S.-listed Chinese companies and and there is a lot of pricing power in main- gest potential air pocket is the property mainland China; I worry about technology land China. market, which has had a historically long blacklists and the restriction of Ameri- rally for China at four-and-a-half years. If can technology in China; I worry about a With MSCI adding China’s domestic the property market suddenly falls off a full decoupling. Those are still relatively A-shares to its emerging markets in- cliff and sales and construction plummet, low-probability risks, but not risks we dex, investors have an array of options the government would have to choose to should dismiss. While I am optimistic about for investing in China. Which do you put substantially more [stimulus] into the China’s productivity, the size and scale of choose? economy or step back and say, “This is part the consumer market, and China’s ability Chwang: Increasingly, we have pivoted of the correction, but we will live with it.” to provide the policy support to respond toward an all-China approach. Last year, to a more restricted economic relationship Chinese A-shares were down roughly 30%, Why wouldn’t the government come with the U.S., increasingly we have tried so we took the opportunity to increase our in to manage such a decline? to pepper our portfolio with assets that exposure. This year, the Hong Kong mar- Kroeber: My guess is they would. The can do OK in an environment with more ket hasn’t moved much and could present questions are, how much and where? Bei- aggression. a buying opportunity because the A-shares jing is trying to balance two objectives: market has rallied quite a bit. But despite Cyclically, they want to keep the show on Well said. Thank you, everyone. This article represents the views of the portfolio managers as of the date of publication and those views and opinions presented are their own. Artisan Partners is not responsible for and cannot guarantee the accuracy or completeness of any statement in the discussion. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. This is not to be considered a recommendation of any products or services listed, including U.S. mutual funds, which are typically available only to U.S. investors. This material is provided for informational purposes without regard to your particular investment needs. This material shall not be construed as investment or tax advice on which you may rely for your investment decisions. Investors should consult their financial and tax adviser before making investments in order to determine the appropriateness of any investment product discussed herein.

Artisan Developing World Strategy Investment Results as of 30 Sep 2019 (%) QTD YTD 1 YR 3 YR 5 YR 10 YR ITD Developing World Composite (Gross) -4.09 26.14 21.82 11.42 — — 9.52 Developing World Composite (Net) -4.34 25.17 20.57 10.27 — — 8.39 MSCI Emerging Markets Index -4.25 5.89 -2.02 5.97 — — 3.15

Annual Returns (%) 12 months ended 30 Sep 2019 2015 2016 2017 2018 2019 Developing World Composite (Gross) — 27.38 24.41 -8.73 21.82 Source: Artisan Partners/MSCI. Returns less than one year are not annualized. Composite inception: 1 Jul 2015.

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Net-of-fees composite returns were calculated using the highest model investment advisory fees applicable to portfolios within the composite. Fees may be higher for certain pooled vehicles and the composite may include accounts with performance-based fees. All performance results are net of commissions and transaction costs, and have been presented gross and net of investment advisory fees. Dividend income is recorded net of foreign withholding taxes on ex-dividend date or as soon after the ex-dividend date as the information becomes available to Artisan Partners. Interest income is recorded on the accrual basis. Performance results for the Index include reinvested dividends and are presented net of foreign withholding taxes but, unlike the portfolio's returns, do not reflect the payment of sales commissions or other expenses incurred in the purchase or sale of the securities included in the indices.

MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

The following is a full list of holdings and percentage weights of a representative account within the Artisan Developing World Composite’s total net assets as of 30 Sep 2019: Adyen NV 4.6%, AIA Group Ltd 4.7%, Alibaba Group Holding Ltd 6.1%, ASML Holding NV 1.2%, B3 SA - Brasil Bolsa Balcao 3.1%, CP ALL PCL 2.4%, Credicorp Ltd 0.4%, Diageo PLC 2.2%, Dino Polska SA 0.5%, Foshan Haitian Flavouring & Food Co Ltd 1.1%, Galaxy Entertainment Group Ltd 2.4%, HDFC Bank Ltd 6.9%, Hermes International 1.1%, Hong Kong Exchanges & Clearing Ltd 1.2%, Huazhu Group Ltd 2.3%, Jiangsu Hengrui Medicine Co Ltd 2.2%, Kweichow Moutai Co Ltd 4.6%, Lojas Renner SA 1.1%, LVMH Moet Hennessy Louis Vuitton SE 3%, MercadoLibre Inc 5%, Netflix Inc 1.2%, NVIDIA Corp 4.9%, Puregold Price Club Inc 0.6%, Raia Drogasil SA 1%, Remy Cointreau SA 1.1%, Sea Ltd 4.9%, Shanghai International Airport Co Ltd 1%, StoneCo Ltd 1.1%, TAL Education Group 4.6%, Tencent Holdings Ltd 4.7%, The Estee Lauder Cos Inc 1%, Titan Co Ltd 2.6%, Visa Inc 4.6%, Yandex NV 3.5%, Yifeng Pharmacy Chain Co Ltd 0.1%, Zhangzhou Pientzehuang Pharmaceutical Co Ltd 1.2%. Portfolio holdings are subject to change without notice and are not intended as recommendations of individual securities.

Artisan Partners Limited Partnership (APLP) is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Artisan Partners UK LLP (APUK) is authorized and regulated by the Financial Conduct Authority and is a registered investment adviser with the SEC. APEL Financial Distribution Services Limited (AP Europe) is regulated by the Central Bank of Ireland. APLP, APUK and AP Europe are collectively, with their parent company and affiliates, referred to as Artisan Partners herein. Artisan Partners is not registered, authorized or eligible for an exemption from registration in all jurisdictions. Therefore, services described herein may not be available in certain jurisdictions. This material does not constitute an offer or solicitation where such actions are not authorized or lawful. Further limitations on the availability of products or services described herein may be imposed.

This material is only intended for investors which meet qualifications as institutional investors as defined in the applicable jurisdiction where this material is received, which includes only Professional Clients or Eligible Counterparties as defined by the Markets in Financial Instruments Directive (MiFID) where this material is issued by APUK or AP Europe. This material is not for use by retail investors and may not be reproduced or distributed without Artisan Partners’ permission. In the United Kingdom, issued by APUK, 25 St. James’s St., Floor 3, London SW1A 1HA, registered in England and Wales (LLP No. OC351201). Registered office: Reading Bridge House, Floor 4, George St., Reading, Berkshire RG1 8LS. In Ireland, issued by AP Europe, Fitzwilliam Hall, Fitzwilliam Pl, Ste. 202, Dublin 2, D02 T292. Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, D02 R296 (Company No. 637966).

Australia: This material is directed at wholesale clients only and is not intended for, or to be relied upon by, private individuals or retail investors. Artisan Partners Australia Pty Ltd is a representative of APLP (ARBN 153 777 292) and APUK (ARBN 603 522 649). APLP and APUK are respectively regulated under US and UK laws which differ from Australian laws and are exempt from the requirement to hold an Australian financial services license under the Australian Corporations Act 2001 in respect to financial services provided in Australia. Bailiwick of Guernsey: The financial services referred to in this material and this document are not being made available in the Bailiwick of Guernsey (Guernsey) to more than 50 persons in Guernsey and the financial services may not be accepted by more than 50 persons in Guernsey. Canada: This material is distributed in Canada by APLP and/or Artisan Partners Distributors LLC, which conduct activities in Canada under exemptions from the dealer, portfolio manager and investment fund manager registration requirements of applicable Canadian securities laws. This material does not constitute an offer of services in circumstances where such exemptions are not available. APLP advisory services are available only to investors that qualify as “permitted clients” under applicable Canadian securities laws.