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The Future of Tech in Australia

Technology Investing News
The Future of Tech in Australia

Australia’s tech sector is making headway on an international level. Learn about the Australia tech outlook and what’s next in the country.

Australia’s technology sector is garnering attention with advancements in artificial intelligence (AI), fintech and cleantech, among other exciting industries.

The country’s characteristically resilient economy — which had not experienced a recession in nearly 30 years prior to the COVID-19 lockdowns — has provided a sturdy backdrop for its growing tech sector. As economies worldwide face uncertainty, Australia’s job market continues to defy global trends.

In fact, in November 2020, Australia added over 90,000 new jobs as coronavirus restrictions were lifted, the Australian Financial Review reported.

Australia tech outlook: Strong international players

In response to Australia’s strong economy, companies at the international scale have been securing a foothold in the country’s markets in recent years.

For instance, Japanese tech conglomerate Softbank (OTC Pink:SFTBY,TSE:9984) began investing in Australia in 2016 through the acquisition of AI and robotics firm ST Solutions. Its flagship robot, Pepper, is designed to greet customers in 21 languages using emotional response analytics. Pepper is at the forefront of Softbank’s robot innovation initiatives.

Similarly, in April 2019, Google (NASDAQ:GOOG) launched its inaugural commercial drone delivery system in North Canberra. The service — called Wing — delivers food, coffee and retail items by drone to residences. Orders are placed through a mobile app.

Some of the biggest names in global tech are also taking positions in Aussie-grown tech startups. In May 2020, Chinese gaming and social media firm Tencent Holdings (OTC Pink:TCHEY,HKEX:0700) bought a 5 percent stake in Australian buy now, pay later company Afterpay (ASX:APT,OTC Pink:AFTPF).

As these large tech companies invest in Australia, Australian unicorns (startups with valuations of more than a billion dollars) have garnered attention. According to CB Insights, there are 528 unicorns globally, and three of those — Canva, Judo Capital and Airwallex — reside in Australia.

Design startup Canva is estimated to be worth US$8.7 billion. It has over 30 million monthly active users, and 85 percent of Fortune 500 companies use its services. In May 2019, it acquired both Pexels and Pixabay, broadening its stock photo subscription model service. After securing US$60 million in funding in late 2020, the company has plans for further acquisitions as it expands globally.

Australia tech outlook: Top tech trends

As mentioned, Australia’s current tech ecosystem is largely underpinned by the country’s advancements in three core sectors: fintech, cleantech and gaming.

According to Deloitte, the fintech sector in Australia is both maturing and scaling at a steady clip, making it ripe for investment. In its Technology Fast 50 2020 report, the firm highlights Half Dome, My Plan Manager and Autoguru as the top technology companies in Australia. For its part, EY reports that 60 percent of Australians use fintech applications, with the adoption rate rising 27 percent since 2017.

When it comes to cryptocurrencies, Australian exchanges CoinJar and Coinspot allow users to buy and sell digital assets. In August 2019, Gemini, the Winklevoss-run exchange, also launched its services in Australia, offering users the ability to exchange bitcoin, bitcoin cash, zcash, litecoin and ether.

Emerging as a leader in the cleantech sector, Australia is making strides in renewable energy technology such as wind and solar power, as well as energy storage. In early 2019, Melbourne began using wind to power 100 percent of its municipal infrastructure, such as universities, town halls and street lights.

In Queensland, Genex Power is planning to begin construction of its 250 megawatt Kidston pumped hydro project in 2021 after securing a government loan of up to AU$610 million.

Meanwhile, as part of a 10 year agreement, members of the Melbourne Renewable Energy Project will purchase 88 gigawatt hours of wind power annually from Pacific Hydro; the deal resulted in the creation of nearly 150 new jobs. According to Fast Company, this new business model has spurred renewable energy contracts from several large corporations in Australia.

As Australia makes formative moves in renewable energy, it is also showing explosive growth in the gaming and esports sectors. According to a PwC report, revenue for Australia’s esports market came to AU$5 billion in 2019, up from AU$1 billion in 2015.

Australia is home to six ASX-listed esports companies: Esports Mogul (ASX:ESH), Emerge Gaming (ASX:EM1), iCandy Interactive (ASX:ICI), Kneomedia (ASX:KNM,OTCQB:KNEOF), MSM (ASX:MSM) and SportsHero (ASX:SHO,OTC Pink:NIROF). Further expanding the esports investment opportunities in Australia, the ASX now has an esports-focused exchange-traded fund (ETF), the VanEck Vectors Video Gaming and Esports ETF (ASX:ESPO). It offers investors broad exposure to the space.

As the esports sector continues to expand, it has attracted international partnerships. In 2018, Riot Games, publisher of League of Legends, partnered with the Australian Football League and brought an esports event to the Margaret Court Arena in Melbourne, a stadium that seats 4,000. In the summer of 2020, Ubisoft Australia extended its partnership with XP Esports Australia for seasons two and three of the XP Women’s League and the new HSL Rainbow Six League.

Australia tech outlook: What’s ahead

Looking ahead, PwC expects the Australian esports market to reach AU$8 billion by 2024. The forecasted growth is attributed to app-based games and esports in a market saturated with smartphone ownership and improved monetisation strategies for increased revenue from mobile games.

Deloitte has made several predictions for the future of tech in Australia. With major sectors such as esports, AI, private 5G and edge computing leading the way into the future, Deloitte states that interoperability with cloud networks will drive tech adoption.

According to the Australian Computer Society, the number of workers in the country’s technology field increased by 6.8 percent between 2018 and 2019 — that represents an annual growth rate that is 1.5 times as fast as the rest of the Australian workforce during the same time period. In addition, another 156,000 jobs in tech will be needed by 2025 to keep up with rising demand.

The capital markets have recognised this growing demand. In mid-2019, ABC News reported that the Australian Securities Exchange was aiming to become an epicentre for tech listings. Over the past few years, it has focused on recruiting more late-stage tech companies to access greater pools of capital.

Underscoring this growth are key economic factors. According to the Organisation for Economic Co-operation and Development (OECD), “Australia has been hit by the coronavirus pandemic less severely than other countries.” The OECD expects real gross domestic product to contract by 3.8 percent in 2020, but it is projected to grow by 3.2 percent in 2021 and 3.1 percent in 2022.

What’s more, the wave of initial public offerings that swept Australia’s tech industry in late 2020 is expected to continue well into 2021. The Australian Financial Review reported that a number of Australian tech companies are on the path towards a “likely listing” for 2021.

Those include buy now, pay later businesses such as Beforepay and Limepay, telecommunications software company ActivePort, marketplace technology firm Marketplacer, fintech company Sniip and diagnostics healthcare technology business Lumos.

Don’t forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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robotics investing

Robotics in Australia

Featured
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Robotics is an area of investing that is growing in Australia ― but is it a sector worth investing in?

The global robotics industry is expected to grow at a compound annual growth rate of 7.8 percent through 2028 according to the Global Industrial Robotics Market Analysis 2020. Robotics is an area of investing that is growing in Australia ― but is it a sector worth investing in?

Broadly speaking, robotics is the design and construction of robots. This can include core automation and production, industrial software, robot technology and integration of robotics. From drones to self-driving cars to toys ― robotics is a growing industry that is beginning to permeate our daily lives.

The distinction between robotics and AI can be a little confusing, but essentially think of robotics like the body and AI like the brain. Both can exist separately, and they are powerful when combined. The goal of a robot is to complete a task faster and more efficiently than a human.

What does the market look like?

The COVID-19 pandemic has seen technology sectors such as robotics accelerate as businesses have faced global challenges. Robotics has been able to help keep spaces safer by replacing humans with robots on factory lines, in eCommerce warehouses or on healthcare frontlines taking temperatures or disinfecting spaces.

What is Australia doing to support the robotics sector?

In early 2020, the Robotics Australia Network was formed to accelerate growth of the domestic robotics industry. The network aims to strengthen global competitiveness and cement Australia as a global leader in robotics.

How does the Australian robotics sector stack up?

According to the International Federation of Robotics, in a ranking of the world's most automated countries it's not even in the top 10. Number one is Singapore, followed by South Korea then Japan.

The investment space for pure robotics companies is relatively small, with greater opportunities to invest in more broader technology, AI and automation stocks.

Who are the big players in robotics stocks?

Robotics stocks in Australia are companies with a strong crossover to other technology sectors like artificial intelligence and virtual reality.

Vection Technologies (ASX:VR1)
Market Cap AU$77.56 million

Vection is a multinational software company with offices in Western Australia as well as Subiaco and Casalecchio di Reno in Italy. The company uses robotics technology as well as 3D, virtual reality, augmented reality, industrial IoT and CAD solutions. The business is split into two sections: IT development and outsourced services. The company also collaborates with Autodesk Technology Centers, the Microsoft Mixed Reality Team and Cisco Systems Italy.

Bill Identity (ASX:BID)

Market Cap AU$52.97 million

Previously known as BidEnergy, Bill Identity is a series of bill management solutions leveraged using robotic process automation, which helps clients increase efficiency. The company serves customers across Australia, New Zealand, the UK, the US and Europe. Bill Identity had a strong year, with total operating revenue growth of 55 percent year-on-year to US$14.6M in FY21.

What are the other ways to invest in robotics?

Another way to get into the robotics sector is investing in robotics exchange traded funds (ETFs), a popular choice that offers exposure to the industry of robotics and artificial intelligence rather than a single company. Two major ETFs in the robotics sector are:

  • BetaShares Global Robotics and Artificial Intelligence ETF (ASX:RBTZ)
  • The ROBO Global Robotics and Automation ETF (ARCA:ROBO)

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

silver investing

Investing in Silver in Australia

Resource Investing News
kangaroos in front of the sunrise

Silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

Analysts have been bullish on gold for the better part of the past decade, but now it's silver's time to shine. While the price of silver tends to rise and fall alongside that of gold, silver's valuation is generally more volatile — slower to move in either direction, but more prone to abrupt spikes and plunges.

Considering the market's longtime gold rush, silver is due for a major price hike. In 2020, silver hit a seven year high with 27 percent year-over-year growth, climbing faster than gold. Silver was on the rise again in February 2021, bolstered by WallStreetBets fervour. Though prices have stabilised since, they remain elevated compared to the past decade. Additionally, at only a fraction of gold's valuation, silver is a much more attainable buy.

Shrewd investors are looking to Australia for their silver picks. A country whose silver mines continued to flourish even when most of the world was in a precious metal slump, Australia has emerged from the COVID-19 pandemic as a major player in the global silver market.

A look at Australia and silver mining

When you think of mining in Australia, you may not think of silver, especially since the country is a top global producer of several other metals, including gold and iron ore. Nevertheless, silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

This may be surprising news, especially since 2020 was an erratic year for silver. Global silver-mining production plunged by 5.9 percent in 2020 — its biggest drop in over 10 years —⁠ following four years of steady decline.

Output from primary silver mines plummeted by 11.9 percent year-over-year, while silver by-product suffered a more modest drop, with production from gold and lead-⁠zinc mines falling by 5.7 percent and 7.4 percent, respectively. Note that silver is largely produced as a by-product of other metal-mining processes, with 72 percent of silver production taking place at non-silver mines.

This production downturn was the result of COVID-19 restrictions that forced mines to suspend operations temporarily. Silver mine closures hit certain places harder than others, with extended closures in top silver-producing countries such as Peru, Mexico, Argentina and Bolivia causing major production drops.

Australia, however, was an exception to this rule, with production increasing by 3 percent. The reason for Australia's success is that it remained relatively untouched by COVID-19 restrictions. While other countries were forced to shut down production facilities, Australia was able to avoid these closures, continuing — and even upgrading — regular operations.

Australia is now the fifth largest silver producer globally, with an annual output of 43.8 million ounces in 2020. While the output of silver-mining giants such as Mexico and Peru (178.1 million and 109.7 million ounces produced in 2020, respectively) continues to far exceed that of Australia, global demand for silver is on the rise, hitting 900 million ounces annually and making room for a new silver-mining powerhouse.

What should investors know about silver investing in Australia?

Silver remains a relatively untapped resource in Australia, which means that investors have plenty of major mining companies to choose from.

Australia's largest mine is the Cannington mine owned by South32 (ASX:S32,OTC Pink:SHTLF). It is ranked as the ninth largest silver-producing mine worldwide, with 11.6 million ounces produced in 2020.

The country's second biggest silver-producing mine is the Mount Isa zinc mine. It is owned by Mount Isa Mines, a subsidiary of Glencore (LSE:GLEN,OTC Pink:GLCNF), and produced around 5.8 million ounces of silver in 2020. The Tritton copper mine, owned by Aeris Resources (ASX:AIS,OTC Pink:ARSRF), followed closely behind with nearly 4.5 million ounces produced in the same year.

Other notable Australian silver mines include the Golden Grove mine, which is owned by 29Metals (ASX:29M), and the Dugald River mine, which is owned by Metallic Minerals (ASX:MMG,TSXV:MMG,OTCQB:MMNGF). In 2020, these mines produced around 2.9 million and 2 million ounces of silver, respectively.

Australia's impressive silver-mining industry is well-positioned for further expansion, with Silver Mines (ASX:SVL,OTC Pink:SLVMF) planning to launch its Bowden silver project in 2023. This New South Wales-based silver mine is projected to produce around 6 million ounces of silver annually, which would make it the country's new second largest producer. The company hopes to capitalise on the promising solar panel market, which currently accounts for about 5.5 percent of all silver demand worldwide.

Moreover, Australian company Thomson Resources (ASX:TMZ,OTC Pink:TMZRF) bought the New South Wales-based Webb and Conrad silver projects from Silver Mines earlier this year in a transaction worth around US$8.6 million. The deal closed on March 31, and will enable Silver Mines to concentrate on its flagship Bowden project.

Investing in silver in Australia

There are many ways to invest in silver, including physical silver, stocks, exchange-traded funds (ETFs), mutual funds, options and futures. Choosing which investment route to take is all about balancing risk and reward.

Investing in physical silver is the most straightforward option: you simply buy a tangible piece of the precious metal in the form of bullion, official coins or medallions. Bullion is a bar or 1 ounce coin of solid silver with at least 99.9 percent purity. Official silver coins are currency produced by a government mint, while silver medallions resemble coins, but lack monetary value, .

The price of physical silver rises and falls alongside the metal's market value. Physical silver is a relatively safe investment, since its value can't be affected by third-party interference or bad business practices (risks characteristic of mining stocks). However, if you plan to trade often, the added costs of buying, selling and storing physical silver may make the investment not worth your while.

Investments in physical silver rose by 8 percent last year, boosted by silver's status as a safe asset and market bullishness on gold. In Australia, coins and medals fabrication increased by 35 percent year-over-year, making physical silver a smart choice for any risk-averse investor.

Of course, low risk often means low reward. If you're looking for a bigger payday, consider investing in silver-mining stocks instead. After all, when silver's market price goes up, it is often the case that the value of a mining stock could spike far higher than that of the physical metal. The disadvantage is that mining stocks are always risky — even when the silver market is strong, a mining endeavour can fail to pan out.

ETFs offer investors the best of both worlds. ETFs are a basket of varied equities, including physical metals and shares in mining companies. Much like individual stocks, they are liable to rise or fall in price according to the market, though they tend to be less risky than stocks.

In 2020, ETF investments were at an all-time-high, though Australia only has one silver ETF that includes the physical precious metal. Stocks are a much more common means of investing in silver in Australia. The country boasts over a dozen silver-mining companies, including South32 and Silver Mines, as well as Newcrest Mining (ASX:NCM,TSX:NCM,OTC Pink:NCMGF), Golden Deeps (ASX:GED) and Investigator Resources (ASX:IVR).

Don't forget to follow us @INN_Australia for real-time news updates.

Securities Disclosure: I, Isabel Armiento, hold no direct investment interest in any company mentioned in this article.

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