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    BARCLAYS ASIA FORUM 2022

    Barclays Asia Forum 2022: Changing World, New Thinking

    07 Dec 2022

    Businesses and economies are struggling more than ever to cope with volatility and uncertainty. To thrive in this environment, practical plans and strategies are needed that can adapt to changing situations. Along with the opportunities offered by new technologies, there are also ethical challenges that need to be addressed.

    Watch more videos from our speakers at the Barclays Asia Forum 2022.

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    1. Macro Shifts

    There was overwhelming agreement that the world is in a transition period. Long-term transitions, such as the shifts from the post-WWII international order and climate change, and short-term changes took many organisations by surprise.

    Speaking of recent changes, Barclays Group CEO, C. S. Venkatakrishnan said, “Certainly, we didn't think about Russia invading Ukraine. We didn't think about global supply-chain challenges, and we've probably had higher inflationary pressures and more volatility in the markets than we might have thought because of this.”

    Overall, the changing inflation environment is a concern for investors. Adeel Khan, Co-Head of Global Markets for Barclays said “Given the large change in interest rate policy from central banks, the investment paradigm will need to change. Asset allocation over the past five years has been based on a zero-rate policy so there needs to be a reassessment of asset allocation, and fund flows have to change.”

    While bond markets are recovering, the equity side may still suffer from real economy issues heading into 2023. The regime of owning risk assets may be over for now, as investors look toward cash and alternative assets.

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    Powering perspectives on international relations

    Gideon Rachman, Chief Foreign Affairs Commentator at the Financial Times, gave his thoughts on how trade flows could shift as the US and China continue their decoupling.

    Inflationary pressures were summarised as the five-Ds:

    ● Deglobalisation, as countries re-examine their supply chains either due to the pandemic or through the lens of national security or energy independence.

    ● Decarbonisation, which is necessary to address the climate crisis but also expensive and can result in higher costs.

    ● Demographics of emerging and developed economies facing ageing populations that require expensive healthcare, while birth rates and working-age populations decline.

    ● Democracy, and its tendency to offer subsidies to citizens for rising costs, such as fuel.

    ● Debt, as high levels of debt incentivise governments to allow inflation to rise.

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    Powering perspectives on supply chains and globalisation

    Larry Fink, Chairman and CEO of BlackRock suggests it’s time to reevaluate the foundations of how we invest due to a range of critical issues the world is facing.

    2. Innovation Edge

    A common theme running through discussions of new technology was how to ensure ethical behaviour is built into the powerful innovations that are rapidly changing our lives.

    A fitting example is the move from Web 2.0 to Web 3.0.

    Panellists at the conference described Web 2.0 as the current internet we are familiar with. Web 2.0 underlies the business models of tech giants such as Facebook and YouTube, in which the tech companies have centralised power. Consumers are the product. The companies sell consumers’ attention to target them with advertisements. They do this very effectively by using consumers’ data and employing complicated, opaque algorithms.

    Web 3.0 promises to change all of this. In Web 3.0, data is a public good, not a private one. If Web 2.0 is based on users' ignorance of their data’s worth, Web 3.0 makes this value transparent, so users can be paid their value and platforms would compete to serve users better.

    In the new model, the algorithm is public. In theory, users who can see the algorithm’s choices would pressure the platform to turn away from a model that puts profit ahead of social values, such as tolerance.

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    Powering perspective on technology

    When technology optimises for any single value, it can be problematic for society, said Tristan Harris, President and Founder of Humane Technology at Barclays Asia Forum.

    Beyond social media and the web, bigger changes, including artificial intelligence (AI), were also discussed. Experts say we are nearing a point where AI will surpass human intelligence, and important decisions are set to be made by machines. While there is no way to ensure AI has humanity’s best interests at heart, the best way to teach AI to be ethical is to be good models ourselves. And for AI to grow positively, consumers need to understand what they are interacting with.

    AI has great potential to change the world – it could be used to solve specific problems, not the least of which is climate change, a topic that also dominated the Forum.

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    Powering perspective on artificial intelligence

    Mo Gawdat, Founder of One Billion Happy, believes that artificial intelligence (AI) nis close to the point of singularity, where machines become smarter than humans.

    3. Solving Sustainable

    Marie Freier, Global Co-Head of Sustainable & Impact Banking at Barclays reframed sustainability in light of recent developments, saying “The backdrop has changed dramatically geopolitically and from a macroeconomic perspective. But the problems haven't gone away. And the challenges we're trying to work through when we think about energy transition – in particular in Asia-Pacific, and globally – remain.”

    Geopolitics and inflation have forced countries to focus on energy security. Developing economies suffering from the slowdown of the global economy may focus on development instead of renewables, viewing climate change as a luxury issue.

    But the fact is, the cost of inaction outweighs the cost of action in developing countries. Renewable energy also gives developing countries opportunities to be energy providers. Renewable energy may be a bright spot for all economies as it becomes less expensive and offers a greater certainty of supply.

    Another fact is that all major economies have committed to substantive carbon emission reduction targets. For investors it’s clear that the change to green energy is coming; what remains obscure is how fast it will happen and which companies or economies will reap the most benefits.

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    Powering perspectives on renewables

    Sumant Sinha spoke about his hopes for COP27 and what unexpected effects the energy security crisis may bring as countries try to forge self-dependence through renewables.

    Another fact is that all major economies have committed to substantive carbon emission reduction targets. For investors it’s clear that the change to green energy is coming; what remains obscure is how fast it will happen and which companies or economies will reap the most benefits.

    But renewables alone are not enough to deal with the climate crisis. Mitigation, adaptation and energy efficiency are all vital elements that require investment. The panellists say we have the global capital to do this and point to the fact that green bonds have been on the rise even while markets have gone down, due to investor demand.

    Others pointed out that the investment side is one thing, but there is a need to build capacity for execution on the ground, or the money will have nowhere to go.

    Our experts will continue to assess the effects of many of these long-term trends as they evolve. You can stay up to date by accessing our latest insights.

     

     

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    Despite a challenging macro environment, inflows to ESG products remains strong says Dave Dai, our Asia-Pacific Head of ESG Research.

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