INVESTMENT
outside the US , which in turn has allowed Russia and China to steadily encroach outside their borders .
In effect , it has dramatically transformed the global economy , permitting savvy investors to find rich new sources of opportunity – if they look beyond the fear factor . As fiduciaries , we need to open both eyes and not just look at the data to manage the future , or we might just miss some of the greatest investment opportunities in the world .
China investing in the US backyard The second major force in geopolitics is being shaped by almost hidden inflationary effects – a silent wrecking ball . China ’ s rapid growth , for instance , has made many of its formerly cheap industries , and its labour , expensive in a global context . So China has moved much of its manufacturing offshore , as far afield as Portugal , the UK , Mexico and East Africa , again opening up fresh opportunities for investors as the international flow of money shifts out of the Asian mainland in search of new markets .
Central to this expansionist push is China ’ s grand ‘ One belt , one road ’ mission to create road and rail infrastructure linking it to Europe , and heavy investment in port facilities elsewhere in the developing world . This is China ’ s way of getting back at the US for letting inflation drift upwards .
The US , too , is undergoing radical change . The east and west coasts , for so long the engine of the US economy , are ceding power to regions such as Texas and other states in the south – close to the most dynamic and competitive emerging market , which is Mexico . Trump ’ s wall is just a distraction that makes many people overlook the potential there .
The more scary and disturbing trend is the formidable rise in people ’ s cost of living and debt burdens . On the one hand this has led to protests as people realise that politicians haven ’ t kept their promises . Yet the other outcome has been a relentless push into innovation , in individual enterprises that are mushrooming on an epic scale .
North Korea , meanwhile , is an issue that shouldn ’ t be relevant to anyone ’ s investment portfolio . This is because Trump has in effect given China permission to ‘ soft annex ’ the territory . While he may rattle nuclear sabres , the US president has made it clear he has little interest in ‘ fixing ’ North Korea .
The subtler issue regarding North Korea is that China ’ s real concern is to maintain strong borders . So too with South Korea . The last thing either country wants is floods of feudal vassals of a Stalinist state overwhelming China and South Korea and causing a humanitarian and economic crisis . Their fear isn ’ t war , but containing refugees . North Koreans don ’ t understand the concept of ‘ work to get pay ’ – it ’ s work to stay alive .
Navigating the dual world of politics and economics We assume the worst when it comes to geopolitics , but we need to put things in perspective . The North Korea standoff doesn ’ t affect markets or increase investment risk . People fail to realise that politics don ’ t define the outcome – it ’ s the profit motive and innovation that does .
Money is a lot like water : it always flows to points of least resistance , where taxes and red tape are less of a hindrance . Moreover , the rise of geopolitical risk fuelled by the nuclear stand-off between the US and North Korea is causing a demand for safe-haven assets , such as gold and other precious metals .