Google's slip-up and Chinese warnings put investor frenzy over AI in check

Investors chasing the sizzling rally in global artificial intelligence-related stocks are getting a reality check.

Google’s demonstration of its artificial intelligence chatbot has already underwhelmed investors with accuracy concerns, spurring the biggest drop in its parent’s shares in more than three months.

A Chinese newspaper warned investors not to blindly join the speculation about stocks that could benefit from rolling out such AI capabilities, saying that it will take time for such concepts to prove their value.

Baidu Inc slumped as much as 8.5 per cent in Hong Kong, after scoring its best day since March when it said Tuesday its ChatGPT-like service was on track for roll out. Other firms including Zhihu, CloudWalk Technology Co, Beijing Deep Glint Technology Co and Hanwang Technology Co also declined.

“The recent buying into ChatGPT has been very speculative. So, the sentiment can cool down very easily if there are regulatory warnings,” said Zhang Gang, strategist at Central China Securities.

The arms race among global tech giants has intensified since ChatGPT took the internet by storm, after its launch in November. Microsoft, which owns a stake in the OpenAI start-up behind ChatGPT, showed off how the technology will supplement its Bing search engine. Not to be outdone, search giant Google quickly showed a novel service called Bard that would incorporate similar AI features. A slew of Chinese companies from Alibaba Group Holding to NetEase have also announced this week that they are developing ChatGPT-like services.

With the initial euphoria tapering, attention has now shifted to navigating the milestone progress at these firms. Alphabet shares tumbled as much as 8.9 per cent on Wednesday after an underwhelming demonstration of its new chatbot.

In China, regulators are warning investors against the frenzy. At least three companies have received inquiries from local stock exchanges after shares rose more than 30 per cent over three straight sessions this week. That has prompted CloudWalk, a face recognition technology developer, to clarify that it hasn’t generated any revenue from ChatGPT products and that it wasn’t involved in any collaboration with OpenAI.

Analysts said it will take some time for real winners to emerge in the space, with regulatory approval and monetisation of the technology being key for such services to take off in China.

“The verdict on China’s self-developed ChatGPT-style tools, which look set to enter the market this year after media reported February 8 that Alibaba is testing its application, similar to NetEase, might only emerge in 2024 as competition spurs innovations in the technology through 2023,” wrote Bloomberg Intelligence analysts Catherine Lim and Trini Tan.

MATCH INFO

Real Madrid 3 (Kroos 4', Ramos 30', Marcelo 37')

Eibar 1 (Bigas 60')

Red flags

Promises of high, fixed or 'guaranteed' returns.
Unregulated structured products or complex investments often used to bypass traditional safeguards.
Lack of clear information, vague language, no access to audited financials.
Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
Hard-selling tactics - creating urgency, offering 'exclusive' deals.

Courtesy: Carol Glynn, founder of Conscious Finance Coaching

UAE currency: the story behind the money in your pockets

If you go

The flights

There are direct flights from Dubai to Sofia with FlyDubai (www.flydubai.com) and Wizz Air (www.wizzair.com), from Dh1,164 and Dh822 return including taxes, respectively.

The trip

Plovdiv is 150km from Sofia, with an hourly bus service taking around 2 hours and costing $16 (Dh58). The Rhodopes can be reached from Sofia in between 2-4hours.

The trip was organised by Bulguides (www.bulguides.com), which organises guided trips throughout Bulgaria. Guiding, accommodation, food and transfers from Plovdiv to the mountains and back costs around 170 USD for a four-day, three-night trip.

UAE currency: the story behind the money in your pockets

CREW

%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ERajesh%20A%20Krishnan%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3ETabu%2C%20Kareena%20Kapoor%20Khan%2C%20Kriti%20Sanon%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203.5%2F5%3C%2Fp%3E%0A

FINAL SCORES

Fujairah 130 for 8 in 20 overs

(Sandy Sandeep 29, Hamdan Tahir 26 no, Umair Ali 2-15)

Sharjah 131 for 8 in 19.3 overs

(Kashif Daud 51, Umair Ali 20, Rohan Mustafa 2-17, Sabir Rao 2-26)

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The years Ramadan fell in May

1987

1954

1921

1888

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”