Tuesday, July 18, 2017

New Silk Road has 'astounding investment upside,' Bennelong fund says


Jessica Sier

2 mins ago

LINKMultinational companies around the world are scrambling to bid on portions of the New Silk Road project. Photo: Kim Kyung-Hoon

The ambitious New Silk Road project is one of the most exciting investment opportunities in the world, says head of Bennelong's infrastructure arm.

In the future, investors will be able to take a slice of this enormous development pie and capitalise onChina's emerging role as leader of global trade, they believe.


While the Australian government has rejected an invitation to be directly involved in China's massive One Belt, One Road project, multinational companies around the world are scrambling to bid on portions of the multi-country undertaking.

"There is an unbelievable shift in political power underway at the moment, alongside this massive economic shift into Asia," says Greg Goodsell, global equity strategist at 4D Infrastructure.

"And as China funds assets like the new Silk Road, the countries these assets run through will owe them an economic debt. There are astounding opportunities for investment upside."

The Silk Road of modern times is a coordinated project spanning from Beijing, which will connect China on land and sea with Europe, Africa, the Middle East and South, Central and Southeast Asia.

The Chinese government is slated to spend as much as a trillion dollars on infrastructure projects and plans to link more than 65 countries and two-thirds of the world's population to its economy.

"As the United States has become a fortress, in terms of global trade policy, China is stepping up to take the lead," said Mr Goodsell.



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PwC estimates that about $US494 billion worth of projects and deals were announced on the One Belt, One Road route last year across seven infrastructure sectors, including utilities, transport and environment.

Multinational businesses with history with Beijing – such as Honeywell International, General Electric and Caterpillar – are actively looking to participate in projects connected with the new Silk Road.

Caterpillar's revenues have been boosted by improving sales in China, and the firm says it has been "deeply involved" in the new Silk Road initiative which it sees as a "long-term opportunity."

Seven Group Holdings – 73 per cent controlled by Kerry Stokes – invests in a heavy equipment dealer that operates Caterpillar dealerships may prove to be a beneficiary of the expansive project.

Locally, benefits are likely to flow through to resource companies, particularly in the form of demand for iron ore and bulk commodities.

But infrastructure funds, like Mr Goodsell's, are waiting in the wings to snap up assets once they get recycled into the listed markets after construction.

"There are going to be all kinds of assets, likes ports and railways that will be available," he said. "The changes in some of these underlying countries will provide very positive upside.

"Combine with the emerging middle class in Asia and it looks, over the long term, to be a most invigorating story

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