Already a subscriber?Martin Conlon strides to the stage of the Mayfair Ballroom in Melbourne’s Grand Hyatt Hotel – and immediately opens his presentation with a pointed dig at Chanticleer.is recalling the recent prediction given at’s AI Summit by Adam Driussi, founder and chief executive of data company Quantium,Martin Conlon sees a regime change coming for the Australian market.
He admits he’s scared by the way Nvidia, Apple, Microsoft and other tech giants now dominate global market indices andAdvertisement This is not just an American problem. Conlon gives the local example of WiseTech Global, the global shipping and logistics giant thatBuying the stock at its current market capitalisation of $33 billion, and hoping to make a 10 per cent return on that investment in perpetuity, requires WiseTech to make a $3 billion operating profit which, even at a very generous margin of 50 per cent, requires revenue of about $6 billion.
“My 30-second view of what’s happened in the last 20 years is basically we spend most of it outsourcing manufacturing to China, which brought the prices of nearly all goods flat to down. We used that as a justification to cut interest rates, and we used those low interest rates to buy residential property – and then that led to a lot of debt.
“We think it’s a time to be pretty well diversified and have a lot of sensibly priced companies, rather than chasing the market darlings.”Conlon argues investors need to work a bit harder to find opportunities in this environment.
Miners, energy companies such as Origin and AGL, pallet supplier Brambles, rail groups and even telecommunications giants such as Telstra could be ways to play the switch back to investment that he believes the country will have to make in the coming years.