Stranded Assets
To state the we are living in a different world than the one that existed just last month is an understatement to the point of being a cliché. Nevertheless, I present to you for consideration, this additional piece of evidence.
This article was first published in Bloomberg News on March 3, 2020. I saved it, intending to share it with you here, as an example of the global investment free-for- all associated with China’s Belt and Road Initiative. I hoped to score additional intellectual points by noting that projects like the “China-Pakistan Economic Corridor”, described in this article, are often more about politics and less about business; the scored point being that its your job as a good business person to know the difference, and don’t believe all of the hype. Further, China is by no means the only project “hype man” on the planet. Rather than are merely the latest, and as of the first of March, the biggest.
My how times have changed! This story now reads like ancient history, exactly 45 days (as I write this now) from the day it was published. In mid April, China must have other priorities, the entire world is retreating from the Covid menace, and the not-so-invisible hand of the near future is rearranging global commerce in real time. I started hearing the term “stranded assets” just last year. These are investments which no longer make sense, and cannot even be sold because the world has moved on from them. Think of a barn full of buggy whips, 100 years ago. Move 10 years into our future (or perhaps even one year) and envision the value of your oilfield where production costs are over $50/barrel. Its not hard to see the Gwadar Port in southern Pakistan as one of these stranded assets, is it? Some day, some how, someone may make something of it. But not now, not anytime soon. China’s Belt and Road looks like the “road to nowhere” from this spot, a tiny speck of sand, on the coast of Pakistan. Be prepared for more of these. And try not to get yourself stranded.
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Courtesy of Ray Brimble, Board of Advisors Chair, Founder of Lynxs and Founder of Seed Pod Investments.
