Complex business: many types of commodities: energy, metals, agri, minerals, etc. Own characteristics
Megatrends: - Urbanisation- Demography- Climate Change- Technology- …
Accidental:- Weather- Disasters- …
Cyclical: - Economic growth- (Geo-)political
developments- …
Market Specs: - Financialisation- Stock- …
Economic Growth Engines
World Trade China’s Growth Contribution
Credit Cycle Commodity Super CycleSource: CEPR/EIU Source: IMF
Source: BISSource: IndexMundi
Oil Production Oil Transport - Maritiem
Oil Transport - Pipelines Oil Consumption
Geopolitical events: production, transportation and consumption
NORTH AMERICAUSA: America First !, protectionism, investigations on administrationMexico: elections in 2018, NAFTA
EUROPEUK: Brexit, ‘lost‘ electionEU: Brexit, Macron, restructureEuropean projectGreece: debt issuesGermany: electionsItaly: elections
LATAMBrazil: corruption leads to politicalinstabilityVenezuela: increasing social unrest
MENAIran: sanctions, regional hegmonySaudi Arabia: regional hegemonyQatar: isolated by SA and Gulf StatesMorocco: social unrestSyria: civil warLybia: political instability, refugeesTurkey: authoritarian regime, refugees
EURASIARussia: revisionist policy, Ukraïne, Middle East, demonstrations
ASIAChina: economic transformation, corruption fighting, CCP congres, OBOR, window of opportunityJapan: North Korea: missile launchesPhilippines: ISIS, authoritarianleadershipIndonesia: Religious clashes
Geopolitical Events
International Power ShiftEconomic Military
Source: IMF
Source: IISS
Source: Goldman Sachs Source: PEW Research
NORTH AMERICA: growing social and politicalpressures, change of US global role?USA: inward-looking, highly polarized politics, populism, budget-constrainedMexico: succes or failure of Mexican reforms?
EUROPE: reform EU project, inwardlooking, threatening periphery, populism, strong institutions, trans-atlantic relationship, demographicpressuresUK: Brexit, political instabilityEU: Brexit, populism, restructureEuropean project
LATAM: public dissatisfaction in governments, crime as top concern, commodity dependent, rightward turnBrazil: political instability, rise of evangelican ChristianityVenezuela: increasing social unrest, humanitarian crisis? ALBA: continue support from China and Russia
MENA: security competition, demographic pressures, less possibilitiesto manage public discontent, possiblemore violent radicalization, contagion to Africa, Europe and Asia, USA committment?Iran: sanctions, regional hegemonySaudi Arabia: regional hegemony
EURASIA: revisionism, insecurityRussia: revisionist policy, more usage of ‘gray zone’military tactics, more domesticcoercion, nationalism, economicvulnerable and constrained, ‘spoiler’.Eurasia: more Chinese involvement, resolution of Ukraïne conflict
ASIA: security competition, regime stability & economic cooperation, uncertainty US committmentChina: slowing economy, window of strategic opportunity, growing middleclass, westward developments(OBOR), aging population, control byCCPIndia: Hedge China’s ambitions, deepening economic integration, tension with Pakistan, growingprosperity vs environmentalchallenges, demographicsJapan: More internationalengagement Indonesia: Rise of Islam
SUB-SAHARAN AFRICA: demographicpressures, migration flows, insufficienteconomic growth, fragile states and radicalization, generational transition in politics, consolidate gains, increasingreligious affiliation, increasing Chinese influence
Geopolitical Trends
Conclusions:
• Long-term: • increasing demand commodities• whereby countries will secure supply (China)
• Short-term:• Vulnerable economic growth• More (geo)political tensions
• For Commodities:• Changing patterns• More incidents and volatility