Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 273

Four key themes to emerge from Asia’s pre-eminent investment conference

I have recently returned from the 25th CLSA Investors’ Forum in Hong Kong, one of the most comprehensive events of its kind in Asia. The investment conference was attended by over 1,800 investors, providing attendees access to over 700 senior executives from nearly 300 leading companies and industry experts around the world.

Four key themes stood out over the five-day Forum, following numerous insightful presentations and one-on-one conversations with industry leaders.

1. Driverless cars

Driverless cars will be here sooner than many expect, according to Mark Crawford, Chief Engineer for Autonomous Driving Systems at Great Wall Motor Company, the largest producer of driverless cars in China. The US is currently leading the way globally in driverless cars, with self-driving technology development company Waymo (formerly the Google self-driving car project) the main frontrunner. Many major automotive brands including GM, Ford and BMW are spending billions on driverless car capabilities, with the driverless car market expected to reach around US$26 billion by 2024. Conversely, while Uber and Google have undergone trials of driverless cars, following a fatality, Uber has ceased testing. Domestically, driverless cars are not expected to become mainstream in Australia for at least 10 years.

Cost is currently a fundamental issue facing driverless cars, with premium pricing a significant barrier. The sensors surrounding driverless cars are the most expensive component in the manufacturing process. Until these costs are reduced and the total cost is on par with regular automotive vehicles, it will be difficult for them to become mainstream.

The shift towards driverless cars is backed by the universal desire to reduce the number of road fatalities, with 37,000 fatalities in the US every year and a staggering 300,000 in China, highlighting an immense and distressing problem. The US and Chinese governments are supportive of driverless cars due to their increased safety. The Great Wall Motor Company has created a partnership with Baidu to develop a driverless car, aiming to achieve mass production of self-driving automobiles by the end of 2020.

[Register for our free weekly newsletter and access to our special investment ebooks]

2. Artificial Intelligence

Many companies discussed the rise of Artificial Intelligence (AI) - what they are doing to capitalise on a trend that will accelerate over the next decade. By 2020, 27% of all Chinese homes will have smart home systems, allowing residents to monitor and manage power usage by configuring systems such as lighting, cooling and heating. Over half will have smart cars. It is clear China intends to be the global leader in AI and is investing significant amounts of capital in research and development. China is joined by the US and the United Kingdom as paving the way. Meanwhile Australia is lagging as few listed domestic companies are considering AI as playing a sizeable role in their future. Appen (ASX:APX) is one of the only companies that provides domestic investors exposure to this thematic.

3. US mid-term elections may provide catalyst for change

The upcoming November US mid-term elections were a popular topic of discussion, with a consensus view that the Democrats will emerge victorious, bringing forward the rising threat of President Trump’s impeachment. Surrounding the mid-term elections is Special Counsel Robert Mueller’s investigation into Russian meddling in the 2016 presidential election, with expectations that the report will be released after the mid-terms, perhaps early next calendar year.

While doubts have been raised about Trump’s ability as US President, his presidency has been positive for the economy, with the S&P 500 Index up 37% since his election. His pro-economic policies are stimulating the US economy to grow at the fastest rate in over a decade, most notable of the policies being the drop in the corporate tax rate from 35% to 21%.

4. Chinese growth and implications for Australia

Compared to last year, the mood on the ground was bearish, with expectations of Chinese growth far less than previous years. There is no doubt Chinese growth is slowing, with 6.5% gross domestic product (GDP) growth this year and expectations around 2019 GDP growth at below 6.3%. The US and China trade war is having a significant short-term impact on China and this will manifest in fourth quarter numbers for the 2018 calendar year, announced early 2019. Chinese manufacturing is slowing as a result of tariffs, with many companies looking to relocate their operations out of China to countries such as Vietnam. This will affect the flow of goods, and to a lesser extent, the consumer.

This slowdown is no great surprise given the Chinese equity market is currently down 30% this calendar year. Overall the outlook for China is weaker than previous years and this will have negative flow on effects in Australia for the resources sector and companies that are exposed to Chinese growth.

 

Chris Stott is the Chief Investment Officer of Wilson Asset Management. This article is for general information only and does not consider the specific circumstances of any individual.

2 Comments
Pete Latham
September 27, 2018

It will be interesting to see if the driverless cars prediction comes to pass. I think the proposal will be akin to authorities saying, here’s a bus or a train service, you won’t need your car anymore. I think the independent nature of Australians in particular, will still want, and choose to have a vehicle that does what they want it to do, and go where and when they want to go and for that reason they will largely shun the driverless car. I think that the tyranny of distance outside the CBDs of major Australian cities will also put a hold on the introduction of electric vehicles, particularly west of the ranges in country, rural and central Australia. The increasing numbers of diesel 4WD vehicles and Grey Nomads wanting vehicles capable of towing Caravans and Campers is an indicator that whilst this idea may gain traction in more densely populated countries, I dont think we will see it happening en masse in Australia anytime soon.
However, we live in interesting times !

Vinay Kolhatkar
September 25, 2018

Re point 3 above, I believe only a third of the Senate seats (35 of 100) are up for re-election in the US midterms. Wouldn't the chance of the Republicans losing the upper house be slim? And unless the Democrats control both houses, impeachment must still look unlikely, for the Senate will acquit Trump if the Democrats succeed in the lower house.

That said, polls have been so wrong in the heartland that even a "sure" lower house victory is never sure; nothing in politics is.

 

Leave a Comment:

banner

Most viewed in recent weeks

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Latest Updates

Superannuation

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

Superannuation

Less than 1% of wealthy families will struggle to pay super tax: study

An ANU study has found that families with at least one super balance over $3 million have average wealth exceeding $19 million - suggesting most are well placed to absorb taxes on unrealised capital gains.   

Superannuation

Are SMSFs getting too much of a free ride?

SMSFs have managed to match, or even outperform, larger super funds despite adopting more conservative investment strategies. This looks at how they've done it - and the potential policy implications.  

Property

A developer's take on Australia's housing issues

Stockland’s development chief discusses supply constraints, government initiatives and the impact of Japanese-owned homebuilders on the industry. He also talks of green shoots in a troubled property market.

Economy

Lessons from 100 years of growing US debt

As the US debt ceiling looms, the usual warnings about a potential crash in bond and equity markets have started to appear. Investors can take confidence from history but should keep an eye on two main indicators.

Investment strategies

Investors might be paying too much for familiarity

US mega-cap tech stocks have dominated recent returns - but is familiarity distorting judgement? Like the Monty Hall problem, investing success often comes from switching when it feels hardest to do so.

Latest from Morningstar

A winning investment strategy sitting right under your nose

How does a strategy built around systematically buying-and-holding a basket of the market's biggest losers perform? It turns out pretty well, so why don't more investors do it?

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.