The most unlikely investment boom of 2018

Tuesday, 21 August 2018
Melbourne, Australia
By Bernd Struben

  • Hold the maggots please
  • Leadership battle in Canberra not over yet

Do you remember ‘airpocalypse’?

That was the clever term given to the rampant air pollution plaguing China’s major cities in 2013.

If your memory needs jogging, the picture below should help. Good morning! Fancy a stroll around town?



chart image

Click to enlarge


‘Airpocalypse’ was the price Chinese citizens paid for the nation’s rapid economic growth and urbanisation. In 2013 it got so bad that Beijing’s air pollution reached 35 times the World Health Organization’s recommended limit.

35 times!

You can see why so many Chinese tourists marvel at Australia’s clear urban vistas. Not to mention our clean water and safe, quality foods.

But China has been working hard to clean up its act. Its rising middle class may be happy to live in mega-cities of 20 million or more. But they won’t put up with lethal air or dangerous foods and medicines.

On the air front, at least, China has made significant progress over the past five years. That’s largely thanks to President Xi Jinping prioritising clean air over growth at all costs. And it’s seen a marked shift from coal to cleaner natural gas in the Middle Kingdom.

As Bloomberg reports:

Beijing residents have been breathing some of the cleanest air in a decade as they begin to reap the benefits of China’s anti-smog push.

Of the seven lowest monthly pollution readings in the capital city since 2008, five have been recorded since the beginning of last summer, according to data gathered by the U.S. Embassy in Beijing. That’s when Chinese officials ramped up enforcement of policies restricting coal burning in Beijing and surrounding areas.

This will no doubt come as welcome news to Beijing’s roughly 22 million residents.

It means older people, kids, and those suffering from asthma will be able to go outside without fearing for their health.

Until, that is, they have a bite to eat.

More, after the markets…

Markets

Overnight the Dow Jones Industrial Average closed up 89.37 points, or 0.35%.

The S&P 500 gained 6.92 points, or 0.24%.

In Europe, the Euro Stoxx 50 index finished up 20.73 points, or 0.61%. Meanwhile, the FTSE 100 rose 0.43%, and Germany’s DAX closed up 120.75 points, or 0.99%.

In Asian markets, Japan’s Nikkei 225 is up 51.48 points, or 0.23%. China’s CSI 300 is up 1.69%.

In Australia, the S&P/ASX 200 is down 65.99 points, or 1.04%%.

On the commodities markets, West Texas Intermediate crude oil is US$66.76 per barrel. Brent crude is US$72.40 per barrel.

Turning to gold, the yellow metal is trading for US$1,193.23 (AU$1,622.78) per troy ounce. Silver is US$14.78 (AU$20.10) per troy ounce.

One bitcoin is worth US$6,303.72.

(For all your latest investment advice on bitcoin, ether, XRP, litecoin…and the rest…go here.)

The Aussie dollar is worth 73.53 US cents.

Hold the maggots please

If you’ve ever travelled outside of Australia, you’ll know you need to be careful what you eat. Especially in emerging nations.

I’ve never made it to China yet. But I have been fortunate enough to travel to dozens of countries spanning every continent, except Antarctica.

The European nations, the US and Canada tended to treat my stomach with some respect. But countries like Mexico, Curacao, Thailand, Indonesia and Morocco — to name a few — most certainly did not.

Don’t worry. I’ll spare you the details of my symptoms. You may be reading this over a meal. Hopefully, a high quality Aussie sourced meal.

I will share one horror moment that occurred over breakfast in Curacao a few years back, though. I was scooping chocolate powder into a glass of milk one morning — breakfast of champions — when I noticed something moving in the can of powder. Closer examination revealed the culprit to be a maggot. And it had friends. Lots of them.

Fortunately, I noticed the infestation before drinking my milk that morning. Unfortunately, I’d used the same chocolate milk powder the day before.

Shudder.

I’ve since taken more care in examining the food in developing nations before eating it. A process that includes a careful sniff. But the reality is most of the things that can make you really ill are also really hard to detect with the naked eye…and nose.

This is an issue the Chinese are well aware of. All 1.4 billion of them.

How, for example, do you know if the salt in your food is proper salt or industrial salt? In Australia that may be a safe assumption. Not so in China.

From thatsmags.com:

In June [2017], police busted a husband-and-wife salt-selling operation in Guangzhou’s Baiyun District. The couple was reportedly buying industrial salt in bulk, repackaging it as ‘Yueyan’-brand iodized table salt and selling the final product both wholesale and retail.

On second thought, don’t pass the salt!

Then there’s the ever pressing question of what to do with all those left over rotting, stinking pig carcasses.

What? This isn’t a concern in your council area?

Again, we turn to China, where some culinary, erm, entrepreneurs thought they’d stumbled onto the perfect solution.

Also from thatsmags.com:

In July [2017], workers at a Guangzhou factory were arrested after it was revealed that they had been boiling “dead, stinking pigs” to extract oil and then packaging the oil immediately and shipping it off to other warehouses, possibly to be used in cooking…

When journalists arrived to the site ahead of the arrests, they found a male worker taking bags of fetid meat and dumping them into a tub of boiling liquid. A layer of white foam was visible on top, while charred chunks of black meat occasionally surfaced. According to the report, the stench rising from the pot was even worse than that of the pig carcasses themselves.

Apologies if you were eating while reading this. I won’t offer any more descriptive examples.

But the point is food safety still remains a big issue in China. And the nation’s rapidly growing, health-conscious middle class is demanding better.

That’s seen Chinese consumers increasingly looking to Australia, with our well deserved reputation for quality food products. Just think about the craze for Aussie honey and infant formula. Not to mention fish, meat and organic nuts.

The opportunities at hand here haven’t been lost on small-cap expert, Ryan Dinse. When the people of the world’s second largest economy begin to take an earnest interest in some of Australia’s smaller food producers, that’s music to Ryan’s ears.

As Ryan points out, it’s the same kind of interest that helped drive the share price of the a2 Milk Company Ltd [ASX:A2M] from 56 cents to $12.03 in five years.

You can see the five-year chart for A2M below:



chart image

Source: Google Finance
Click to enlarge


While the stock’s down 23.2% since its 16 March 2018 high, the share price is still up 399.0% since 6 January 2017. And there’s no doubt that much of the company’s success is owed to Chinese demand.

In his new research paper, ‘Australian Pink Gold’, Ryan Dinse explains why Chinese demand for quality Aussie produce is not only set to keep growing…it’s set to explode.

And he’s recommending three small-cap Australian companies that could match, or beat, a2 Milk Company’s previous share price performance over the next year.

But don’t take my word for it.

You can read Ryan’s full report, ‘Australian Pink Gold’, here.

Finally, here’s the latest out of Canberra from The Australian Tribune:

‘Leadership Battle in Canberra Not Over Yet’

The gloves were off in Parliament House this morning. After several weeks of building doubts over a possible leadership spill, Prime Minister Malcolm Turnbull decided to bring the matter to a head.

And he had the numbers to back him.

Malcolm Turnbull defeated…’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another, then The Australian Tribune is for you.

And it’s absolutely free.

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You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd