Joe Bunting
The humanitarian tragedy of Russia's invasion of the Ukraine has descended like a pall over the world, and it is clear that defenceless civilians and the truth are as always the first victims of war.
Reading between the claims and counterclaims and peering through the storm of volatility across markets, we dimly perceive the possibility that Russia's endgame may have less to do with anything in the Ukraine and much more to do with a pivot of their immense resources flow towards the East.
In the run up to this war, the first invasion of the Ukraine in Crimea had rankled in the West for eight years and so too had NATO's expansion through Eastern Europe with Russia. But Nordstream 2 had also become a major point of frustration for Russia having spent the best part of a decade investing in it for a significant increase in production flow, through a closing window for fossil fuel, that the Europeans clearly needed but their allies were opposed to.
China has warned the West that their sanctions against Russia could backfire as they may rub their hands at the prospect of privileged access to these resources with one less competitor to bid against. India's relations with Russia have also taken precedence to relations with the West since independence in 1948 and notably abstained from recent UN sanctions against Russia. These countries in the East are strong growth markets with high levels of investment and attractive demographics to Russia, craving resources, which they may regard more optimistically as a future trading block, echoing the collaboration Jim Rohwer envisaged in his 'Asia Rising' a generation ago.
For the medium term it seems increasingly clear to the Endeavour Fund’s management team that the US and Europe must invest more for their own defence, energy, materials and agriculture resources – and indeed their economy broadly - than they have since the end of the Cold War and go further to matching that investment in the East to stay competitive. China footholds in Africa and South America too are way stronger than anything Europe and the US can count on.
This points to investment themes in the Endeavour Fund that have been present for many years but which have increasingly vital development potential into which the Fund Managers have been adding in recent weeks and will continue to do so beyond the resolution of this gruesome conflict: investments like Shell, Conoco and Marathon for energy, Norsk Hydro for aluminium, Anglo American and Freeport McMorran for iron ore and copper, Caterpillar and Emerson for equipment, Alfen for EV and devolved grids, and Ceres Power for the hydrogen breakthrough.
If the business cycle, tentatively underway for the past year or so post-Covid, still has any legs, they feel strongest in the US and perhaps the UK, with Europe now to prove its response will be sufficient and timely. The scene may then be set for an investment and innovation boom long overdue, often in history the response of people threatened, and the wake-up call from a Sino-Russian Asia rising. That would also presage a re-energised stronger independent Europe that millions of Eastern European refugees could happily call their home.
