2023-05-27 03:30:48
Global Economic Recomposition: Strategic Relocation and Autonomy
What if nothing was like before? In a context of multifactorial crises that have revealed our dependencies and our strategic vulnerabilities, the global economy is rebuilding itself. Russian energy, Chinese medicines, Taiwanese microchips… globalization had made us dependent. The extreme concentration of production sites, which affects strategic sectors and know-how all over the world, is one of the causes. 75% of active pharmaceutical ingredients sold in Europe (80% in the United States) today come from China and India, compared to 20% 30 years ago. 80% of semiconductors and 90% of components of voltaic panels are produced in Asia…, there are many examples. Strategic relocation has become a major issue.
The shocks of Covid and the war in Ukraine have seized up global supply chains and reshuffled the cards of globalization: companies are rethinking their production and supply chains, strategic sectors are relocating all over the world, friendlier local ecosystems are emerging, economies are entering new dimensions, in search of resilience, autonomy and sovereignty. A quest that finds a solution in the relocation of goods and strategic know-how.
This new deal reorganizes the flow of goods and services between areas to reduce dependencies in key sectors, technology, industry, energy, food, health. But also for break with the fragmentation of production processes scattered over several continents and the cascades of shortages caused by tensions in supply chains, through which 80% of world trade passes. The large groups are adopting the so-called “China +1” strategy, splitting the supply chains.
Investment opportunities in a changing world
This dynamic is supported by government plans seeking to reduce dependence on Asia in particular. This is the case of the semiconductor industry, with the Chips Act in the United States (more than 50 billion dollars) or the European Union plan announced in 2022 (45 billion euros). To the imperative of autonomy is added a crucial imperative of sovereignty.
Encouraged by digitization and automation, these industrial, economic and geopolitical changes are opening up new perspectives, create fields of innovation and sources of opportunity. The winners ? Companies with strong local roots that are already deploying resilient strategies, benefit from essential assets, gas pipelines or telecom towers, companies with strategic patents, production or sourcing close to the end consumer, as well as public funding .
This is the case of Meyer-Burger[1]which develops photovoltaic panels in Switzerland and Germany, the world leader Imerys, which is launching a project in France to exploit lithium, a material essential to the energy transition, or even Euroapi, whose European production sites allow us to break our dependence on active pharmaceutical ingredients.
In line with this new global situation, Echiquier Go Local[2] meets this strategic challenge and the diversification needs of investors.
[1] The quoted values are quoted by way of example. Neither their presence in the managed portfolios nor their performance is guaranteed.
[2] This fund is mainly exposed to the risk of capital loss, equity risk, currency risk, and risk related to discretionary management.
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