AI could contribute over US$15 trillion to global economy by 2030
This is more than the combined gross domestic product (GDP) of China and India currently, said Stephen Jue, portfolio manager at Allianz Global Investors.
Jue sees investment opportunities across a broad spectrum of technologies and sectors embracing the disruptive power of AI.
“The adoption of AI is expected to boost profits in many industries through efficiencies over the long term, spanning from education, healthcare, farming to logistics,” he said at a technology and AI themed virtual investment forum today organised by RHB Asset Management.
Tan Jee Hoon, chief investment officer of Asia-Pacific equities at RHB Asset Management, told the forum that prospects for companies that are technology and internet based and AI enabled would continue to get stronger.
“This comes especially when technology adoptions rates were seen to be scaled up significantly in recent days, on the backdrop of the pandemic outbreak, which has changed behavioural and consumption patterns,” he said.
Tan spoke of how the tech-giants of the internet ecosystem have played a prominent role in one’s daily life spanning from work, live and play.
He used examples of US-based tech players like Google, Facebook and Amazon as well as China-based Tencent, Ali Baba and Baidu.
These tech giants have been the leading outperformers in the stock market’s recent recovery, he noted.
Addressing current valuations on tech companies, Allianz’s Jue disagreed with the notion of bubble valuations seen on the tech giants.
“Post the dot-com bust era, tech companies are trading at 15 to 20 times price-earnings range for a number of years. Only more recently, the valuations are slightly higher at 23 times.
“These are bigger companies and [with] a sustainable business model, ‘software as a service’ have been proven out as profitable cash flow models in subscription terms, and there are more real earnings growth support now,” he added.
While most shares are seen to be trading higher with the help of massive stock market liquidity, RHB’s Tan thinks that the tech sector deserve a more positive re-rating than other sectors.
“I believe post-Covid winners will not be across the board as only certain sectors will be able to benefit the post-Covid era, and that sector happens to be in the tech space,” he said.
In view of the growing opportunity in tech transformation in the new normal, RHB Asset Management has launched two funds with long-term capital appreciation objectives that are related to the AI theme.
The first is RHB Global Artificial Intelligence Fund, which invests in a basket of companies whose business will benefit through the evolution of AI.
The second is RHB Big Cap China Enterprise Fund, an open-ended unit trust that invests in securities of China-based companies with high growth potential, where 40% of the fund is invested in the technology sector.