Craig Mowll

The rise of robotics and increasing automation has changed the world. The consequences for countries and sectors competing on this new, uneven playing field will be far-reaching, and investors’ asset allocation decisions will be challenged as a result.

These are the thoughts which guide the investment decisions of Louis-Vincent Gave, Founding Partner and Chief Executive Officer of investment manager, GaveKal Capital Limited (GaveKal), which manages Asia-Pacific investment products for Australian and international investors.

Mr Gave’s comments came on the occasion of his visit to Australia for Certitude Global Investments (Certitude), which offers Australian investors access to the GaveKal Asian Opportunities Fund, run by Mr Gave and his team in Hong Kong.

Mr Gave said that it was not an exaggeration to say that robotics, automation and the so-called ‘internet of things’ will make an entire class of workers obsolete and change the competitive landscape forever.

“Two strong arms is no longer a source of competitive advantage, and there are any number of jobs which will no longer exist in the near future. Other jobs will eventually take their place, no doubt, but the conundrum remains. It is easy to see which jobs will go, but not nearly so easy to see what they will be replaced with,” Mr Gave explained.

For investors looking to invest in Asia, the new world order will have ramifications for their asset allocation decisions. For example, Japan has been in a deflationary spiral for the past few years, largely ignored by investors who were quick to grasp that it was only a macro trade, rising when the Yen went down.

Mr Gave explained that the Japan of today is very different from the Japan of 20 years ago, and that the alert investor can find some very pleasant upside surprises.

“Japanese companies have morphed into very different animals, they have restructured and focused on costs, and many are delivering handsome returns as a result. But even more importantly, there are a large number of Japanese companies firmly positioned at the forefront of some of the disruptions re-shaping our global economy.

“These include robotics, electric cars, self-drive cars, alternative energy, and healthcare, just to name a few. I think it’s fair to say that investors can no longer safely afford to ignore Japan,” he said.

Craig Mowll, Chief Executive Officer of Certitude, said the bottom line is that successful investors understand that they need to make decisions based on the world they have, not the world they would like to have – including the impact of robotics and similar technology.

“This also means identifying the macro themes, like disruption, which are likely to impact on markets generally, and then finding market inefficiencies through bottom-up analysis and valuation. Choosing an investment manager which specialises in the region and understands all of the complex themes at play is the best way to ensure success,” Mr Mowll said.

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