As Globalization Peaks, Investors Look to Robots

As workers struggle with the uneven fruits of globalization and automation, investors are backing the next wave of transformative technology, Credit Suisse’s APAC private bank chief investment officer John Woods says.

Global trade has stalled in recent months, despite strong export numbers out of Asia, and those figures are leading into a discussion about “peak globalization”, Woods said, AAP reported.

Woods said the question of whether globalization has become the development model of yesteryear, and whether the focus will now move more to driving domestic consumption, is “the big discussion at the moment”. And questioning the future of globalization makes “some kind of intuitive sense” in the current environment of rising global protectionism.

A wave of populism has gripped the US and Europe in particular, where recent elections have illustrated a wave of support for anti-immigration and anti-free trade agreements. “I don’t think that people really appreciated that they could express their discontent at the ballot box until reasonably recently,” Woods said.

“In a certain way, it’s the last opportunity to express dissatisfaction because when you are largely becoming irrelevant rather than exploited; the only recourse you have is to an election.” He said he believes developments in technology have taken people by surprise, and even now the full extent of how technology is set to transform the world is under-appreciated.

“I don’t think that people appreciate how quickly population growth is decelerating and how quickly automation is eroding jobs.” The number of expected job losses around the Asean region, in retail, in auto, is “extraordinary”, according to Woods.

“The overlay to all this is a tech story,” said Woods, who advises the private bank’s ultra-high net worth Asian clients. “We’ve got a lot of interest in robotic funds, artificial intelligence funds and baskets of companies associated with that sort of thing. The funds we follow are based in Europe, but could just as well be in the US.”

He said that in Asia, although there was a lot of manufacturing and intellectual property in the region, there wasn’t necessarily the right investment exposure. Australian equities don’t have the right level of exposure to IT either, he said.

“The depth and choice is in Europe and the US. Asia-based clients particularly from Hong Kong, Singapore and China are all interested in exploring this space. They are all putting money in it.”

Ageing is also a very powerful investment theme for the future, he said, naming sectors such as healthcare, life assurance, pension funds, asset management and construction as likely to benefit in this environment.