We participated in the 29th Annual CITIC CLSA Flagship Investors’ Forum, which was held virtually again this year. Every year, CLSA gathers some excellent big-picture presenters on a range of timely topics. Once again, there was an interesting lineup – although we did miss the face-to-face conversations with money managers and attendees from around the world.
An overarching topic of this year’s Forum was the various regional and worldwide struggles, with a wealth of speakers analyzing both current and future macro and geopolitical challenges. Ongoing pandemic issues, disrupted supply chains, the Russia-Ukraine situation, and inflation are sparks threatening the precarious balance of the global economy. As international trade policies offer less incentive for cooperation, countries and corporations are turning their attention inwards and focusing on regional development to the detriment of global commerce.
International trade specialist Simon Evenett unpacked the deterioration of global efficiency amid trade and supply-chain hurdles resulting from policies shifting more towards national support. The outlook for global trade has become messier and less certain post the Trump-era US-China trade war escalation and Covid trade implications.
However, even prior to this escalation, everything was not quite as open as it appeared. Governments were already using subsidies to help domestic champions gain an advantage and used tariffs to control cheap imports. When this approach was insufficient, export bans and import controls were also used. Where is all this heading? Evenett sees “fuzzy” trade blocks evolving, with non-aligned nations such as India, Turkey, and Vietnam among potential beneficiaries of this new trade climate, with a foot placed firmly in each camp (Asia/West). Perhaps the most interesting comment was that his research suggests that – despite widespread press coverage – the actual share of G7 companies and capital that have left Russia is quite small.
Continuing the analysis of our deglobalizing world, renowned global economist Dambisa Moyo shared how drops in trade, capital flows, migration, and multiculturalism affect investment allocations and portfolios.
James Rickards provided a thoughtful conversation on payment and reserve currencies set for disruption and Sir Bob Geldof, humanitarian and political activist, shared his thoughts on global food security and ways to mitigate risk.
Energy expert Mark Mills compared the total capital expenditure globally on oil and gas versus renewables. The world is spending equal amounts in both domains, however, funds spent on wind and solar generate significantly less energy output compared to funds spent on oil and gas infrastructure. A dollar spent on the oil and gas sector generates over 400% greater lifetime energy output than a dollar spent on renewables.
Mills took it one step further, discussing what is needed for the global energy transition away from fossil fuels. Building one car battery requires 1,000 lbs of minerals, which in turn requires 500,000 lbs of materials to be mined. The goal of the energy transition is to reduce carbon emissions, but before an electric vehicle is even delivered to the customer, its production has generated 12 tons of CO2 (perhaps more), whereas a diesel-powered vehicle has generated only 5 tons of CO2.
Mills concluded that driving an EV over 65,000 miles can achieve net savings of CO2 when compared to a diesel car. But that doesn’t mean EVs will not produce CO2. The number of miles driven and the type of usage ultimately determine what type of vehicle would have the least CO2 footprint per driver.
A favourite at this year’s Forum was former cybercriminal Brett Johnson, who revealed known weaknesses that contribute to making cybercrime so prevalent and focused on modalities to protect both individuals and businesses from attacks. Statistics show that 90% of cybercrime is not sophisticated, with 92% using widely available data and with 90% of breaches occurring via email, which allows for skirting firewalls and results in 87% phishing effectiveness.
Johnson now leads a reformed life as a respected consultant to corporations and the FBI. While the FBI has a massive footprint, it has only around 200 agents focused on cybercrime, making it highly improbable for petty cyber criminals to be thwarted. Johnson's presentation was a good reminder to keep data secure and never click on email links unless from a trusted sender.
American Futurist Amy Webb gave a keynote address to show how data-driven longitudinal tech trends can help investors understand which trends matter and which are merely hype. Webb started her presentation by reminding us just how significant the changes in our lives are. From generational geopolitics shifts to technological advancements to post-pandemic behavioural and lifestyle changes, our world looks fundamentally different from only a few years ago.
What technologies will have a significant impact? What is a major trend, and what is merely trendy? Webb’s presentation focused on two topics: Web3 and synthetic biology.
Bottom Line
Once again, this year’s Forum offered a great lineup of presenters. The depth of research presented was a good reminder that no matter what headlines say, data can colour the underlying situation. Moving forward, SANDSTONE’S view was reinforced – this decade will be completely different from the last one. We will continue to let our research drive us forward.