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doctorpot1
wrote a post07/07/2022 00:14
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De-globalisation and self-sufficiency seems to be the future

TLDR: BlackRock's thoughts on what is the future themes of the world concurred with my views too. A sad view of de-globalisation and for countries to start moving into being self-sufficient. Covid pandemic and the war had opened the eyes of many leaders of the world about the cons of globalisation. The hoarding of the vaccines and food supplies, and the weaponisation of the US dollars, financial system, oil and food. The world moving forward will be different going forward.
Feel free to drop suggestion and share about companies in the future trends so we all can learn together too GrinGrin
Story time
During the seminar, one slide that sticks out the most was this slide on the future themes of the world. Why was this slide most important to me, it is because that is where the future growth sectors are and where the greatest growth will be at. Which means lots of money, lots of profit and lots of risks too. As a famous quote said
Skate to where the puck is going, not where it has been.
In the future themes, Digital Transformation is one of the theme, but that is nothing new. It has been there since the dotcom bubble till now. However, there are 3 big new themes that caught my attention. China vs USA tech Competition, Covid & Food Shortages, and Energy Crisis.
Screen grab of a slide on the future themes of the world
Screen grab of a slide on the future themes of the world
Covid & Food Shortages, and Energy Crisis themes seems to have emerged and grow since the covid pandemic in March of 2020. When the world is scrambling to develop vaccines to fight the virus, and the West with their more advance technology companies manage to develop great vaccines swiftly. However, the companies also had been hoarding the vaccines for themselves and their allies, raking in big profits in times of crisis.
Some leaders have been pushing to share the vaccines formula with every countries so that we Earthlings can end this pandemic sooner than later but it is to no avail. EU rejected sharing, $Pfizer(PFE.US)$ and $Moderna(MRNA.US)$ is spending money lobbying against it (source in link below). So poorer countries suffers the pandemic much longer than the richer countries.
Before the war, which happened in Feb 2022, inflation for oil and food was already high. Gas was up 66.8%, oil was up 37.9%, Wheat was up 32.1% and corn was up 61.0%. This is probably caused by QE Unlimited where the Fed printed a lot of money at a time when supply chain was affected. It is basic economic. When there are more money chasing fewer goods, price rises. Then the war happened and it caused even more supply chain problem which resulted in way lesser goods available. Sanction which was imposed on food, oil and gas further reduced the amount of goods available. So when there are more money chasing even fewer goods, price rise even more.
Inflation number before the war and in June 2022
Inflation number before the war and in June 2022
When inflation is out of control, everyone suffers, but those who are poorer suffers more. When there are shortage of food, everyone suffers, but those who are poorer suffers more. So over time, we have seen countries starting to ban the export of food to ensure their citizen have enough, and to help control inflation on food prices. Because when food is kept within the country, there are more food in the country. When there are same amount of money chasing even more food, price drops.
The interesting thing is that poorer countries tend to be the ones growing food. So is this Karma? In 2020, the richer countries benefit from having vaccines and aren't willing to share; Now in 2022, the poorer countries benefit from having food and are starting to not share ChuckleChuckle.
Conclusion
In this short 2 years, we have been through rough times together and that is when cracks in the system starts to show. In this short span of time we saw the hoarding of vaccines and food supplies, and the weaponisation of the US dollars, financial system, oil and food. Thus, the world probably saw all the dangers of the current system, and how their assumption they had on the current system crumble in front of their eyes. So more and more efforts will be made to make themselves less dependent and more self-reliant. So I guess the opportunity for us is that we can look into companies, in other countries, that is in the future trend sector as more investments could be pumped into them by the government.
For the Energy Crisis sector, I have $Sembcorp Marine(S51.SG)$ as it is backed by Temasek (government linked) which is moving into green energy. Probably should find some government backed Green Energy companies in China, and US too.
For the Food Shortages sector, I have $OLAM INTERNATIONAL LIMITED(OLMIF.US)$ and $Wilmar Intl(F34.SG)$, which are bigger international player listed in $SGX(S68.SG)$. Hopefully, governments would pump more investments into them to help expand the food agriculture industries in the countries.
Feel free to drop suggestion and share about companies in the future trends so we all can learn together too GrinGrin
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  • Marlene Bethune : good read

  • doctorpot1OP Marlene Bethune: thank you JoyfulJoyful hope it benefit you a little bit GrinGrin

  • BullyMoo : good read, thank you for sharing

  • MonkeyGee : I guess inflation is here to stay

  • FCC-bull : Doctorpot1, thanks for the write up. One question - do you see Commodity related company like Wilmar, Olam, benefits more from the food shortages or they lose more?

  • doctorpot1OP MonkeyGee: Yea some countries already in hyper inflation mode. Sri Lanka just announce bankruptcy and they have no money to even buy oil anymore. this inflation hits the poorer countries the most, while richer country are managing to survive and trying hard to combat inflation.

  • doctorpot1OP BullyMoo: no problem JoyfulJoyful hope it helps

  • doctorpot1OP FCC-bull: I may be wrong but my thoughts is that Olam and Wilmar may benefit from the food shortage trend as they are involved in the entire supply chain, from growing food, to selling food on the shelf, in multiple countries. So being a big company with experience in the entire supply chain, I was hoping that they will benefit from government grants and investments to scale up their operations in the growing of food part. but even if they don't benefit from the growing food piece, they will still be the ones selling the food grown so there can be opportunities there for them too.
    however, it also depends if the management is smart enough to capitalise on the trend la. Olam just restructured to be more agile so I'm hopeful they will capitalise on it. but Wilmar will still have to look and see

  • FCC-bull doctorpot1OP: Thank you for sharing of insight.

  • doctorpot1OP FCC-bull: no problem Grin