On 22 November 2023, the Circle of Independent Analysts held its annual conference, sponsored in particular by the SFAF. Three round tables brought together financial analysts, portfolio managers and economists to discuss the importance of AI for the outlook for the 2024 financial markets. Eric Galiègue, Chairman of the Circle of Independent Analysts, member of the SFAF and Chairman of its Valuation Committee, reviews the event.
Artificial intelligence and business analysis: the position of financial analysts
Participants: Gilles Bazy-Sire, Equity GPS, François d'Hautefeuille, SFAF - Evariste Quant Research, and Lionel Pellicer, SFAF - Phiadvisor Valquant
Moderator: Hubert Tassin, Boursing
Artificial Intelligence (AI) is the result of the exponential growth in available data and computer processing power. There is no doubt that this is a major development that will have far-reaching consequences for the profession of financial analyst. It automates many tasks in a context of interpolation (from known data in a space of dimension N), whereas the analyst extrapolates in a context of subjectivity.
This difference is essential in order to consider that AI tools are extremely valuable aids (synthesis of known data), but will not replace the deeply human opinion of the financial analyst. It will allow analysts to spend more time with their investor clients and with companies. AI should not be focused on forming a "single thought".
On the contrary, it will multiply into many other AIs. We could even say that in the future there will be as many AIs as there are analysts!
Artificial intelligence and stock selection for 2024: the position of portfolio managers
Participants : Eric Bleines, SFAF - Swiss Life Gestion Privée, Marc Favard, SFAF - Promepar Asset Management, and Daniel Tondu, SFAF - Gestion 21
Moderator: Romain Dion, journalist for Le Revenu
The deployment of AI is still in its infancy and, as during the gold rush, it is the sellers of shovels and pickaxes who will most likely be the winners. AI itself is not a revolution: it is part of the digital transformation of the economy and raises major problems for society and for collective and individual intelligence. It concentrates considerable value around the "7 Wonders of Wall Street" (Microsoft, Nvidia, Tesla, Meta, Apple, Alphabet and Amazon), which inevitably shocks "fundamental" managers.
For the investment industry, the productivity gains in corporate reporting and analysis will be considerable. They will allow more time to be devoted to communicating with clients. The impact of AI on the outlook for 2024 is already significant: it means we can look forward to a recovery in corporate investment, but also to AI applications that will already generate significant sales. Nevertheless, the choice of stocks directly involved in AI is limited.
Artificial intelligence and the 2024 outlook: the economists' position
Participants: Jean-Luc Buchalet, Pythagore Consulting, Eric Galiegue, SFAF - Phiadvisor Valquant, and Véronique Riches Flores, Riches Flores Research
Moderator: Jean-François Filliatre, Editorial Director for Marchés Gagnants and "Et + encore".
AI is an extension of the information and communication technology revolution that has been shaping our society for over 20 years. It is as important as the advent of the steam engine in the 19th century and electricity in the 20th. AI represents an undeniable societal upheaval in many areas that are still largely ignored. Will it be more effective in terms of productivity than the development of new technologies has been to date? Everything will depend, to a large extent, on the distribution of income, which is the only way to transform productivity gains into potential growth and a surge in investment. AI is driving considerable productivity gains, particularly for companies that rely most heavily on the production factor "labour": commercial, technological, industrial and healthcare services, where staff costs are the highest as a percentage of sales (over 30%). China seems to have lost the AI battle to the USA, who are the big winners. For example: SMIC is the only Chinese company capable of rivalling the Taiwanese (TSMC), but with third-generation microprocessors of just 28nm.
A summary of the day's proceedings and a video recap of the round tables are available here.