Advertisement
Macroscope | Belt and road bonds are poised to make a splash as investors eye infrastructure gains
- With returns on equity uncertain in a challenging global economy, China’s massive project will propel infrastructure to become the next red-hot asset class for investors
Reading Time:3 minutes
Why you can trust SCMP
Consider this: the next big thing in global capital markets may well be a surge in belt-and-road bond issuance. Infrastructure in general, and the “Belt and Road Initiative” in particular, may be poised for a great leap forward in popularity as an asset class.
If this sounds a little improbable, look at what is going on in the wider world economy. United States President Donald Trump's zero-sum game of waging a trade war with China, and potentially Japan and Europe, along with the Brexit idiocy is diverting attention from what should be alarm at the slowdown in activity.
Trade, manufacturing activity, private capital investment and personal consumption trends are all soft in advanced economies. Only business inventories seem to be growing, and this contributed strongly to US first-quarter growth figures, for which Mr Trump is claiming credit.
Advertisement
Not much for financial markets to get excited about. But money remains cheap and plentiful, courtesy of central banks cooing dovishly about monetary prospects. With real-estate prices softening markedly, there are few places to go, other than to equities and bonds.
So, where do markets (and the world) look for growth? Re-armament is going on apace around the world but that is hardly cause for optimism. In fact, there is something awfully reminiscent of the period just before the second world war as US trade protection and isolationism grows while defence spending swells.
Advertisement
Select Voice
Choose your listening speed
Get through articles 2x faster
1.25x
250 WPM
Slow
Average
Fast
1.25x