A couple of weeks ago I did a post highlighting some of the trends the team at Trinity Bridge Asia Ltd. noted during 2022. I thought I’d follow up with some observations on trends that I will be keeping an eye out for in 2023. The first thing to say is to beware of my skills as a fortune teller. In the 2022 post I noted that China was moribund and that I didn’t expect that to change soon. Within 24 hours the Chinese government had scrapped the zero-COVID strategy and on Sunday we witnessed some 400k people crossing the HK/Shenzhen border. Things change pretty quickly in Asia.
What does this opening up mean? I still expect a pretty difficult couple of quarters as we see the inevitable wave of infections but as herd immunity takes hold we are likely to see a rapid bounce back in economic activity and, for us, investing activity.
Another big macro-trend we will see in 2023 is India surpassing China in population. This is expected in April. The population India and China will both be 1.4b and change. Together, fully 35% of the global total of 8b. In terms of our sector, growth capital investing, we see a very lively domestic early stage and venture sector. We hope to see more interest from Indian investors in the later stage end of the market AND more foreign investors interested in successful Indian businesses wishing to grow outside India.
We did a piece of research work in early 2022 on the ESG investing in Asia. To be frank, I groaned (internally anyway) when we asked to do this project. I thought we’d see more PR than actually investing. I was wrong. Our key finding was that the asset owners (SWFs, pension and insurance companies) are putting pressure on the professional investors (including VCs and PE companies) to take ethnical investing seriously. I haven’t seen that trickle down yet into seeing a plethora of specific Asia ESG funds but that might well change. We are definitely seeing existing funds in technology investing take ESG more seriously as a factor in their decision making. This will only increase in 2023.
One specific space I see being important in 2023 is the advent of the circular economy and more specifically for our work the use of technology to facilitate that sector. I hope to see some really interesting companies in this space.
The re-gigging of supply chains is well documented elsewhere. One specific space where we are seeing this manifest itself is in reg-tech. Many of the KYC/KYB tech and data providers have seen a fall in due diligence work for China but with offsetting growth in SE Asia. This is not a super original insight but the winners from delinking are Vietnam, Malaysia and Thailand. I hope to see more opportunity for Trinity Bridge there.
In the next couple of weeks, I will do a third post in this series. I will be writing about trends in the American and global technology investing and how this might impact Asia. Stay tuned.