Insights from Vikram Mansharamani at the Portfolio Construction Forum.

I was at a two day conference a couple of weeks ago which focused on pillars of portfolio construction, mind you I attended it live online.

US Geopolitical analyst and global trend watcher Vikram Mansharamani is a regular at these particular conferences. He has the innate ability to put together multiple and complicated issues of the globe into remarkably easy context, and his presentations are where regular stock picking or asset allocation gets left far behind.

Still, the issues he highlights are always important factors to consider on top of the usual economic and investment cycles.

This time around he highlighted the growing rivalry between China and the United States, arguing that various global risks, including climate change, the global food fight, currency wars, military competition, the space race, tech wars and human rights, can be understood best within the context of the clash.

This rivalry has far-reaching consequences, impacting global economic, military, and political relationships, with Australia being a prime example of this.

Australia, rich in natural resources (similar to that of Ukraine), has attracted China’s interest as it seeks to secure essential assets. Mansharamani highlighted China’s recent strategic partnership with the Solomon Islands as a move to exert control over Australia indirectly. He speculated about China’s military strategies of deception and surprise, emphasizing that while China is “making sounds about Tiawan” a direct attack on Australia is a possibility (not probability), whilst also offering that could be Japan, the Philippines or South Korea.

Factors like China’s struggling economic growth, demographic disparities, and potential for social unrest could influence these actions. He pointed to China working hard to establish a connection with Brazil (food, protein, iron ore) as well as it’s Belt and Road Initiative (BRI).

Vikram questioned whether China could have used indebtedness by participating BRI countries to influence crucial geopolitical decisions or break down global co-operation – for example the WTO (World Trade Organisation), WHO (World Health Organisation) and NATO (North Atlantic Treaty Organisation) have all been tested in the last few years.

Within the space race debate, he mentioned that GPS, the US satellite system which is used in all our cars, is also relied upon by the entire global financial system. Furthermore, Pine Gap in Australia, is almost the most important US intelligence facility outside the US.

Another significant risk discussed was the emergence of an alternative reserve currency to the US dollar, as the US’s global currency privilege has been weaponised and faces challenges from other nations. Mansharamani points out that gold deliveries are increasingly heading to countries like China, Russia, and Turkey, potentially hinting at the development of a gold-backed currency that could challenge the US dollar.

Additionally, he raised concerns about climate change, highlighting China’s approach to carbon emissions and its construction of coal-fired power plants, which contrasts with Western efforts to reduce emissions. Is it possibly part of their grander plan?

In summary, Vikram’s insights underscore the complex interplay of geopolitical, economic, and environmental factors, with the rivalry between China and the US at the center of many global risks and uncertainties.

At the end he asks….. is the world being forced to choose which side it will be on?