Winner takes all: The race for the world’s resources DASH keynote address
This morning I am blogging live from the DASH conference in London. Opening the conference today is Dr Dambisa Moyo – Speaking on China and the race for resources.
China within the context of the macro backdrop and what’s happening in the demand and supply side.
Two key things in the commodities space, commodities have gone up by 150% we have seen considerable uptakes in commodities because of the droughts etc, we have also seen energies prices go up. There are at least 25 wars at conflicts that have there origins in commodities. Something I think is interesting is that the US issued a report about how commodity prices are going to be very significant in the years to come.
It is really important for us to get a handle on why these things are happening.
Some of the supply and demand issues facing us in the coming years.
Key drivers for demand: Population growth, wealth increases (specifically mobile phones), urbanisation.
The supply picture is made up of: Arable land, Water, Energy, Minerals.
Where does China fit into this? I would argue that China’s campaign for resources is made up of three pillars: symbiosis, deep pockets (they pay more than an asset’s worth), monopsonist – they have become a loan buyer.
Three things that keep me interested in this sector; people living in the emerging world striving to improve their quality of life, intensity of use of resources, demand destruction.
Q & A
Africa is the largest source of unused land, could Africa overcome it’s many problems and utilise that potential?
The data suggests that things have changed considerably. In terms of democracy, 50% of the countries in Africa have democracy – a good question would be how sustainable is democracy in poorer country, and how possible is for these countries to withstand political volatility. I fundamentally believe we have turned the worst corner. Freedom house has done a lot of work on political change, civil rights. If you look at capital, labour and productivity (key factors contributing to economic growth) there is improvement in all of these areas.
Guinness Asset Management: Tim Guinness : The prognosis is that expansion is about to taper off and house building will stabilise. The commodities will continue to expand and prices will the reduce. How do you see the big picture moving forward.
I think there is a point to be made for dissipating iron. I anticipate that there will be a focus on improving the quality of infrastructure/indoor plumbing systems etc.