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Outlook 2019: Digitalisation and the internet

3 January 2019

We asked three of our fund managers to highlight their key expectations for digitalisation and the internet in 2019.

The development of digitialsation

Mark Hawtin, Investment Director – Technology

We think that one of the big themes for 2019 is digitalisation. We are finally seeing the opportunity for human labour to be replaced by digital alternatives. The way in which digital technology can be used to replicate relatively simple or repetitive human tasks is really taking hold now and we would expect to see a number of companies in that sector, which specialise in converting from analogue to digital, to be particularly interesting.

The rise of the internet in China

Jian Shi Cortesi, Portfolio Manager – Asian Equities

The internet in China remains a very interesting investment stream as consumers in the world's most populated country continue to embrace the internet for their shopping and entertainment needs. Last year (2017) was a very good year for Chinese internet stocks, but stock prices have corrected dramatically in 2018 following the general sell-off in the Chinese market. Currently many of these stocks have been reset in terms of expectations and I think that's paving the way for a recovery in the next couple of years. Therefore I expect at some point in 2019 the stock prices of Chinese internet companies will finish consolidating, which may then present the possibility for the next rally.

The revival of Japan’s machinery makers

Reiko Mito, Portfolio Manager – Japanese Equities

One of the investment themes we are looking at for 2019 is the turnaround of the machinery sector. This sector has been heavily hit by concerns over the global growth slowdown and also by the US / China trade friction. However, based on previous experience we believe the trough may be seen early in Q2 or even late Q1, which should be quite an event for us. We believe in the secure growth of the machinery sector because factory automation nowadays is needed not only because of labour shortages or because of the interest rate hikes, but because many of the products and electronic components have become increasingly fine-tuned and require a high grade procedure. This work can no longer be done by human beings and must be done by machines, so for this reason I believe the machinery sector will have secure growth.


Important legal information
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a specific security is not a recommendation to buy or sell that security. Past performance is not an indicator of future performance and current or future trends.
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