The rise of technology in China feels inseparable from the dominance of the traditional big tech firms: Baidu, Alibaba and Tencent (or BAT for short). What were once the drivers of fortunes for Chinese investors, have more recently become the laggards in a struggling market. In this episode, we sought to discover whether these recent struggles are simply a barometer of the troubling macro outlook in China, or a more permanent de-rating for the former champions. Friend of the podcast Steven Luk joined us once more for a wide-ranging discussion on the current state of China tech, the advent of AI in China, regulation, super apps and much more.

00:00 - Episode Intro

00:57 - Era of rapid connectivity shifting to one of government regulation

06:57 - Development of the big tech players

13:18 - Government regulation – new paradigm

17:29 - Rerating of China tech stocks & the markets

23:25 - VC/PE - Capital Flows in China tech sector

32:37 - Stock picking: medium- to long-term need for selective stock picking

36:03 - AI – a different dynamic in China

43:57 - Shelving of Ant IPO and move from disorderly to orderly capital

44:54 - Summary

There is an inevitability around the idea that Artificial Intelligence already has Oxford’s ‘Word of the Year’ tied up. The transition from being the preserve of rocket scientists and Sci-Fi writers towards general office chitchat, feels representative of the explosive progress in the sector over the past twelve months. To help us journey down this rabbit hole, we asked Jim Robillard to take us from Star Wars to Large Language Models and everything in between. As a man who has invested through the Dotcom Bubble, the dawn of the internet age, and today’s tech-dominated markets, we can think of no better guide.

• 00:26 Episode Introduction
• 00:50 Gimmick to Reality - how did we get here?
• 05:40 LLMs & Generative AI - the advent of Parallel Processing
• 12:20 Narrow ANI & General AGI - how close are we to the latter?
• 21:07 Impact on Working People's Lives
• 27:21 Negative Considerations - cybersecurity & kill switches
• 32:27 Impact on Wider Market & Investing
• 37:32 Large Cap vs Small Cap - the 'Barbell Effect'
• 43:01 Stock Picking vs Algorithmic Trading
• 48:34 Fundamental Investment Process
• 53:26 Implications for the Financial Industry
• 56:41 Investment Edge
• 59:53 Summary
• 01:03:26 Jim's Recommended Sources

Show notes:

Chamath Palihapitiya - the 'Barbell Effect' (06:00-07:30)

Ted Talk: Sam Harris How Can We Build AI Without Losing Control Over It?

Wait But Why? The Artificial Intelligence Revolution

Nick Bostrom - Superintelligence; Paths, Dangers, Strategie

58 Minutes with Dr Esterina Nervino of City University Hong Kong and Steven Luk, CEO of FountainCap Research & Investment.

As part of our ongoing China series, Hugo Rogers of Aravis Capital sits down with Dr Esterina Nervino and Steven Luk to discuss emerging consumer trends in China. The consumer, the main engine of the Chinese growth story for these past two decades, is often a subject treated with broad brush strokes. For this episode, we wanted to dig deeper and understand how the Chinese consumer has evolved over the past decade, how digitalization, urbanization and sustainability are driving change in consumer profiles as well as the relentless rise of international luxury brands.

Steven Luk, who we welcome back, is CEO of FountainCap Research and Investment, a HK-based China-focused investment manager. Dr. Esterina Nervino, is Assistant Professor in the Departments of English and Marketing at the City University of Hong Kong. She is also an Associate Director within the Sales and Consulting Unit and recently contributed to KPMG’s ‘Luxury Redefined’ report.

00:00 Disclaimer

00:34 Introduction to Aravis Presents

00:57 Introduction to Topic: China Consumer

01:48 Perceptions vs Reality of the Chinese Consumer

07:21 Post Covid consumer trends

10:31 Observation notes from a recent field trip

14:44 KPMG report on consumer profiles in China

19:40 Key differences in consumer behaviour between the tiered cities

23:15 Digitalisation in China

30:39 International brands in the face of emerging consumer nationalism

36:21 Chinese brands expanding in the West and comparison with South Korea

39:52 Luxury goods success in China

48:32 Sustainability

54:24 Effect of ageing population on consumption

57:14 Closing remarks & takeaways

29 Minutes with Siddarth Mehta, Founder & CIO of Bay Capital Partners

Hugo Rogers of Aravis Capital sits down with Siddarth Mehta, Founder & CIO of Bay Capital Partners, to discuss the current state of play in India.

India has long been the ‘chosen one’ for emerging market investors given its favourable demographics, dynamic economy, and geopolitical centrality as the world's largest democracy. In this podcast, we look to understand the size of the opportunity, the Indian consumer and whether we expect the next generation of Satya Nadella’s to stay in their country of birth to build world-leading technology firms.

Topics covered:

00:00 Disclaimer

01:05 Podcast Introduction

01:52 Framing the Opportunity

03:11 Is viewing India through the ‘China lens’ helpful?

07:28 Why is now (still) the time to invest in India?

09:29 How government policy is shaping infrastructure and growth

12:35 The Indian Tech Stack as a driver for change

15:36 Producing unicorns and the Indian company of the future

17:42 Shoring up the Brain Drain

20:16 Valuations – still worth it?

22:22 India’s geopolitical quandry – East, West or Centre?

24:54 Is the BRICs concept no longer helpful?

26:40 Views on ESG criteria for an emerging market

This Podcast was recorded by Aravis Capital Ltd which is an appointed representative of Aravis Partners LLP which is authorised and regulated by the Financial Conduct Authority (528684). Past performance is not a reliable guide to future performance, investments can go down as well as up, and you may get back less than your original investment.

35 Minutes with Rob Maina, Portfolio Manager & Chris Barnett, Co-CEO & Managing Member of Cramer Rosenthal McGlynn.

Sam Wood, CFA speaks with Rob Maina and Chris Barnett of Cramer Rosenthal McGlynn. Topics covered include:

• The reasons behind investor/allocator apathy towards Value despite recent strong returns.

• Why small and mid-cap in Value is especially interesting in the current environment.

• The twin tailwinds of historically wide valuation spreads between Value and Growth and small caps vs. large caps.

• The impact of macro variables and how the market’s concerns about inflation and recessions could impact a Value portfolio in the near term and long term.

• The benefits of active in SMID Value.

• The importance of risk management/avoiding drawdowns in today’s market and how consistent performance can lead to great long-term outcomes for investors

This Podcast was recorded by Aravis Capital Ltd which is an appointed representative of Aravis Partners LLP which is authorised and regulated by the Financial Conduct Authority (528684). Past performance is not a reliable guide to future performance, investments can go down as well as up, and you may get back less than your original investment.

23 Minutes with Steven Luk, CEO of FountainCap Research & Investment

Hugo Rogers of Aravis Capital sits down with Steven Luk to discuss the current state of play in China. Topics covered include shifting investor attitudes, common misconceptions about investing in China, overlooked demographic trends, the developing renewable energy sector & the outlook for growth in China.

This Podcast was recorded by Aravis Capital Ltd which is an appointed representative of Aravis Partners LLP which is authorised and regulated by the Financial Conduct Authority (528684). Past performance is not a reliable guide to future performance, investments can go down as well as up, and you may get back less than your original investment.