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Summary BRIC and Asia countries want to develop the New Silk Road. The New Silk Road will boost international trade. BRIC and Asia companies will benefit from the existence of the New Silk Road. Every BRIC and Asia shares price reduction should be treated as an opportunity for accumulation. When 500 years ago the economy of many countries began to integrate, Eurasia became the world trade center. But in the following centuries the USA became a hegemon. Now Eurasia has a chance to change the situation significantly. The construction of the New Silk Road can help. There is a powerful force in Eurasia . This region has 75% of the global population. On its territory there are more than 70% of all energy resources and about 65% of global wealth. An alternative for controlling an entire continent is to dominate the world’s oceans. Controlling the sea trade routes allows control of international trade and movement of strategic raw materials, so Eurasia can be indirectly controlled. This was a British Empire strategy in the 19th century – whoever control the sea routes, controlled Eurasia also. In the 20th century, control of the oceans has passed into the hands of the United States. Just as the British, the Americans control Eurasia with the help of numerous military bases . Americans have more military bases than all other countries put together. Where in the world is the U.S. Military? (August 2015) (click to enlarge) Lily pads – small security locations Source: Politico China and Russia show the largest disapproval against the US hegemony. Unable to resist the sea power of the United States, these countries are trying to neutralize it. Russia and China are trying to transform Eurasia in such way, which allows them to control trade routes but also allows to diminish the importance of the sea trade routes. (click to enlarge) Source: World Shipping Council Reducing the role of the sea trade is of great importance in terms of geopolitics. The transformation with which we now have to deal with on the Eurasia continent is one of the major changes on the international scene since the end of World War II. Reintegration of Asia and Europe – known most recently as the “New Silk Road” – is what the United States fear most. Silk Road existed in the past. It was a trade route which connected China with Europe . It was more than 6,500 km length. The Old Silk Road Source: Perceptions The New Silk Road is supposed to be a network of high-speed railways, modern highways, airports, seaports, energy networks and infrastructure. If everything will go according to the plan, the train from London will reach Beijing in just two days in 2025 ! The New Silk Road (click to enlarge) Source: Xinhua New Silk Road is the largest infrastructure investment in history. The combination of Europe and Asia overland trade routes will give Eurasia the independence from the United States. Reactivation of the Silk Road was announced in 2013 by the Chinese president Xi Jinping. Officially, the project was not, of course, a counterweight to the US sea hegemony. The project was presented as the axis of cooperation between the countries of Europe and Asia. The Chinese are incredibly effective and consistent, they have access to appropriate technology and they have huge financial resources and political will to implement such an ambitious project. The New Silk Road project is officially in the initial stage. Implementation of the first stage has already begun. The train run from Yiwu (China) to Madrid (Spain) took four months at the turn of 2014 and 2015. An ambitious project of the New Silk Road is just one of the elements that integrate the economy of Eurasia. In the past three years we saw the establishment of the Asian Infrastructure Investment Bank (AIIB), New Development Bank (NDB), Eurasian Economic Union (EEU). There are also ongoing works at SWIFT-alternative payment system . Summary China, Russia and other BRIC and Asia countries know that they must act together in order to counter the military and economic power of the United States. The development of the New Silk Road will create new conditions for trade. The projects are incredibly ambitious, but the Chinese are very effective in the implementation of the economic assumptions. In just three years, their local currency was made the fifth most commonly used trading currency in the world. The Chinese established juan-denominated crude derivatives contract just few weeks ago. However, it is not certain that the New Silk Road will emerge. Chinese projects will encounter the powerful resistance from the US administration and its allies. The United States – as a real hegemon – will do everything it can to maintain a dominant position. In addition, the creation of a New Silk Road may be hampered by the imperial Russian impulse under the leadership of W. Putin. For example, the extension of the conflict in the east of Ukraine on the whole CEE region will certainly hamper the implementation of the New Silk Road project. How to invest in the development of a New Silk Road Assuming, however, that all will go well, and the new Silk Road will be built in 10-20 years, you can ask the question: how should I invest to achieve gains from the emergence of this incredible infrastructure project? Of course, the creation of the New Silk Road will benefit – first and foremost – Russia, China and all countries which find themselves on the trail. The companies from countries which are now in 3rd league of world economy can grow significantly. So it seems that every panic sale of Asian, Russian and BRIC’ shares should be used by investors to accumulate. Of course, the easiest and cheapest way to do it is investing through appropriate ETFs. Below there are lists of the cheapest and the best performing ETF funds. 5 Best Broad Asia ETFs – 3 Years Return Source: ETFdb 5 Cheapest Broad Asia ETFs Source: ETFdb BRIC ETFs 5 Year Returns Source: ETFdb BRIC ETFs Expense Ratio Source: ETFdb Scalper1 News
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