Saturday, April 24, 2010

The Shift from West to East - driven by Cash, Commodities and Creativity

I have just been doing some research on the emerging trends of demand for food and energy commodities in Asia and came across this paper from Standard Chartered Bank (Standard Chartered Research ).

In summary:

  • There is a huge fundamental change is underway in the global economy. 
  • The shift in the balance of economic power from the West to the East will last for decades.
  • There will be winners and losers in this shift. The winners will be those with financial, natural or human resources, or one or more of the three Cs: cash, commodities or creativity

  •  Creativity may be the most powerful of all the resources to be rich in. With vast numbers of people entering the workforce, huge improvements in productivity, and continued globalisation, the rewards for innovation and creativity will become even greater. 
  •  The three Cs are shaping the New World Order, as well as the path of the current recovery. For example, China’s cash has allowed it to inflate its demand and raised Asia’s exports back to pre-crisis levels, despite an uncertain outlook clouded by weak G3 demand and growing protectionism. 
  •  In Africa, the rebound in commodity prices and a growing share of trade with emerging markets have also supported the trade recovery. 
  •  Strong fundamentals and flush liquidity are supporting Asian credits and currencies, especially as USD strength peaks in light of Europe’s improving situation, rising risk appetite and shifting interest rate expectations.

Further developing this thinking - if you don't have cash or commodities - then you need to be creative.

In a context where economic power (the cash) rests with the Chinese and East Asia - access to the food, energy and water based commodity economies will be critical - and if you don't have these - you need to develop cash flow from your THINKING.

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