How Can You Profit From War?
Today we'll look at one of the most combustible and war-torn regions on earth. It’s home to some of the fastest-growing economies in the world… and some of the largest reserves of oil and natural gas on the planet. Over US$5 billion of trade flows through this region… but a fragile peace hangs by a thread. Now, the world holds its breath as two superpowers hurtle headlong toward war (with a dozen other countries caught in the crossfire).
No… not the Middle East. I’m talking about the South China Sea.
Sandwiched between Hong Kong to the north, the Philippines to the east and Vietnam to the west, the South China Sea is among the world’s most resource-rich regions and essential shipping routes. It contains around 11 billion barrels of oil, 190 trillion cubic feet of natural gas, and 10 percent of the world’s fisheries.
It is the most direct sea lane between Asia and Europe, and a critical trade route for China, Japan and South Korea. Over a third of the world’s maritime traffic flows through the region.
So although the South China Sea appears to be a regional dispute, it is central to the wider strategic chess game being fought out between China and the United States.
Make no mistake: China wants to knock the U.S. off its perch. And it is catching up… fast. Not just in terms of “hard power” (armed forces) but “soft power” too (economic growth, trade and investment). Just look at China’s One Belt One Road (OBOR) initiative – designed to give China increasing influence over global politics and trade.
The South China Sea is now the site of a strategic battle of wills, pitting China against the U.S. With resources and principles of international law at stake, no one wants to back down. And China’s status as a rising power presents a challenge to the U.S., further heightening the risk of escalation.
Meanwhile, smaller countries in the region find themselves stuck between a rock and a hard place. While much of Southeast Asia depends on the U.S. for defense, China is a huge (and growing) trading partner for the region.
And both China and the U.S. are using all the tools at their disposal to get the upper hand. Later on, we’ll look at each of the tools being used in this “unconventional” war… including debt, the balance of trade, currencies, defense spending and good old-fashioned firepower. And show how investors can gain.
We’ll highlight the companies, sectors and countries set to benefit as this conflict threatens to spiral out of control. And we’ll help our readers anticipate the next move in this four-dimensional game of chess. That’s crucial because investing without understanding is just a shot in the dark.