Please discover the most awkward bit of financial jargon I’ve ever come across.
It’s “kangaroo-nicorns”.
If that sounds incomprehensible and ridiculous to you, I agree.
It’s sort of a crappy pun.
In the venture capital world, a “unicorn” is a start up that reaches a $1 billion valuation.
From memory, someone originally tagged them a unicorn because they were so rare.
These days they seem to be more like household cats – they’re everywhere!
A kangaroo-nicorn is a start up from Australia that reaches the same level.
I came across the word in the Financial Times yesterday.
The article is a good news piece for us here.
International venture capitalists see opportunity!
See this quote…
“US institutional investors including MetLife and Harvard University’s endowment have backed a $420mn fund by one of the Australian venture capital firms behind Canva and other “kangaroo-nicorns”, as a country once dismissed as a tech backwater becomes a hunting ground for foreign capital.”
The tech scene is Sydney in hot, and some of the big successes like Atlassian and Afterpay have paved the way.
Australia, in general, looks solid in the current global climate. We have a steady government, low unemployment, the gigantic super sector and are resource rich.
I don’t expect this VC trend to stop either. I’m still expecting North American money to pour over the resource sector, especially gold.
It will be interesting to see if the Aussie dollar can get a decent lift over the next few years from this. If enough capital pours into Australia, it may well do so.
You and I have been on a mission all week. We’re picking through the signals to see whether Aussie shares are still rich in opportunity.
This new VC fund suggests the answer is yes.
You and I are public market investors. We can’t access the same companies as the VC fund the Financial Times references.
That said, the general observation still counts. Australian businesses can create great wealth.
Check out this from the Australian Financial Review…
“Lorikeet, a two-year-old Sydney start-up that is making waves globally in the red-hot artificial intelligence agent market, has doubled its valuation since February in a $54 million funding round that values it at more than $200 million…
“It describes the AI agents and the platform it sells as AI-powered customer concierges, which go beyond answering customer service questions to actually resolve problems.”
Let me share two personal anecdotes around AI and tech currently.
I was chatting to a mum at my daughter’s school the other day. She works casually in the local library.
She was wondering whether to do the diploma to become a full librarian (I didn’t know you needed higher education be a librarian.)
Then she added it seemed like ‘AI’ would make the role redundant soon enough.
‘It’s an uncertain time,’ she said. Likely, she’ll hold back on spending on the degree.
We heard the same thing from a friend of ours who is a designer.
She expects AI to put her out of a job within a few years.
My wife uses Canva a lot and says its amazing. She’s neither a designer or even good with computers.
The implication is that companies that can cash in on AI can go to rich valuations, and fast. But broader middle class jobs are going to come under pressure, as will confidence.
This puts a paradox in play. The share market and the economy could diverge significantly.
People tend to conflate the two a little bit too much.
The line of thinking goes that a healthy economy induces strong spending which companies can then harvest as profits.
There’s truth to this, no doubt.
But the share market contains many companies that don’t rely on domestic spending, or even Australia, or a strong middle class.
If Canva, as an example, can sell to the world, then an Australian designer out of work is not their problem. Neither is it for their shareholders.
The share market counts profits and growth, and doesn’t care for the social aspects.
What I’m saying is that we could see a rising share market even if unemployment rises from AI job losses – at least for a time.
We’ve seen a taste of this from CBA – who is going to use AI to cut jobs, which is costs for them.
One wonders what this means for general index investing too.
It’s quite clear from the US markets that the only game in town is the Mag 7.
The SP “493” is a waste of time, with earnings growth much lower.
It seems to me AI is going to accentuate this dynamic. There will be the AI winners, and everybody else.
It simply must be the case that you factor AI into every investment decision you make.
There is great opportunity ahead, but much disruption too.
Best Wishes,
Callum Newman,
Australian Small-Cap Investigator and Small-Cap Systems
***
Murray’s Chart of the Day –
ASX Ltd
Source: Tradingview
[Click to open in a new window]
The announcement that the ASX Ltd [ASX:ASX] may see their monopoly over listing stocks and trading taken away from them is not great news.
The Sydney Morning Herald reported that ‘the corporate watchdog is in the final stages of considering an application from a rival to market operator ASX Limited, which would pave the way for American giant Cboe to conduct share market listings of companies in Australia.’
ASX Ltd opened down 8% this morning, which is a fairly muted response considering the ramifications.
Taking market share off the ASX may take years to accomplish so perhaps fears are overblown for now. But the fact is the ASX has been priced as a monopoly and if that changes we may see a derating.
The technical set up isn’t great, because we have seen a sharp sell-off since the all-time high was hit in 2021.
The last 18 months has seen an attempted recovery, but that has traced out a bearish ABC pattern which is currently seeing confirmation.
That means ASX is best avoided for now, and unless it can head above $75.00 (currently $64.50), I will remain bearish.
A failure below $54.00 would be particularly bearish considering the news.
Regards,
Murray Dawes,
Retirement Trader and International Stock Trader
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