I love a sunburnt country.
A land of sweeping plains,
Of ragged mountain ranges,
Of droughts and flooding rains.
My South African father quoted those lines one lunchtime, as my Sydney-based sister gathered with my Hong Kong family over lunch in Bristol, my British hometown. They come from the poem My Country, written more than a century ago by Dorothea Mackellar, a homesick Aussie who was visiting Britain at the time.
The poem first appeared in The Spectator, in 1908, though she probably started it four years before, at the age of 19. Mackellar was from a well-to-do Sydneysider family but became best-known as a "bush poet" singing the praises of the Aussie outdoors.
Why do I mention it in an investment column? The poem sprang to mind because a modern Mackellar wouldn't have had to return back home to find a sunburnt country. Bristol and southern England have been in the middle of a heatwave, and we arrived just in time to experience the hottest day on human record in Britain, at 40.3°C (equivalent to 105°F). The sun chased us from Portugal to London to Bristol to Amsterdam, with hardly a scent of rain, and frequently not a single cloud on the horizon.
As a Brit, I'm hardwired to talk about the weather, which like soccer can fill any gap in a conversation, and frequently is the main gist. With flooding hitting Sydney, with New Zealand lashed by rain, with a third La Niña on the cards for Australia, with China shutting factories due to extreme heat, and two typhoons already this season in Hong Kong, my family orbit is upended, a sunburnt Britain, a doused Down Under, a tumultuous East Asia.
I noted recently that financial markets do a funny job of factoring in geopolitical turmoil, with a "remarkably mild" response to Chinese wargames mimicking a barricade of the only Chinese democracy, Taiwan. The Russian invasion of Ukraine, China's threats to a free Taiwan, and North Korea's recent resumption of ballistic missile blasts have all typically provided blips for stock exchanges but leave little long-term trace. It seems financial analysts are fine examining every word of Fed minutes to predict interest-rate direction but not so hot on calculating, if China for instance did invade Taiwan, whether we're in the early days of World War III.
Maybe the market makers figure that we're all going to zero in WWIII. Major investors do prep, though - I see that PayPal (PYPL) co-founder and early Facebook (FB) investor Peter Thiel is attempting to build a mansion/bunker in New Zealand. He has this week been foiled by the local council, who say his plans near Queenstown would have too negative an environmental impact on the New Zealand "alps." Back to the prepper bunker drawing board...
Appropriately enough, Thiel wants to take proceeds of his investment outperformance to build at Mount Alpha. He said in the past that he'll seek refuge in New Zealand in the case of pandemic or societal collapse.
I'll spend some time in upcoming columns identifying sectors that could benefit from increasing climate change, and massive weather events. We can expect the shift to electric vehicles to gather momentum, while it may be time to reconsider nuclear-power plays as the world attempts to wean itself off fossil fuels. And while markets are baffled by geopolitics, we're still seeing the effects of the global Covid-19 shutdown work its way through economies, producing inflation even in Asia. That's the part of the world I know best, having now lived in Hong Kong for 21 years, longer than anywhere else.
I'm not complaining about the sun in Europe this summer. But as it burns our skin, it is a reminder of extreme heat, drought, floods and cold, a weather pattern in one part of the world producing dramatic effects elsewhere on our planet. Having not left Hong Kong for 2-1/2 years due to the city's oppressive quarantine rules, my European travels have reopened my eyes to how interconnected our economies and nations are, despite recent trends to cut off the oppressive regimes in Russia, China, Iran and North Korea.
We need not lament the decision by four Chinese companies - PetroChina (PTR) and HK:0857, Sinopec (SHI) and HK:0386, Chalco (ACH) and HK:2600 and China Life Insurance (LFC) and HK:2628 - to delist their ADRs in New York. That's two Big Oil drillers and an aluminum smelter that Wall Street will lose, the life insurer maybe the only force for good among the group. They plan to keep their listings in Hong Kong and mainland China.
Investors should be concerned if next-gen companies are forced to delist, the prominent Chinese EV makers, new-energy stocks, solar-panel makers, Internet enablers driving the next-generation economy forward. But I feel positive that a compromise will eventually be agreed between the Securities and Exchange Commission and its Chinese counterpart to allow Chinese listings to continue in the United States. Should that fail, U.S. investors will need to turn to similar plays available elsewhere in Asia. They may be smaller than the China plays. But they're still strong.
Will we sort out climate change? I am not nearly so optimistic as I am about Chinese U.S. listings. It's too big a topic to bite off in one go, although presciently Mackellar gave it a shot.
The "army" she heard drumming came from the steady, soaking rain. The opal-hearted country she was missing delivered "flood and fire and famine" but also its release. For those disasters, "She pays us back threefold," the poet writes.
Mackellar should have the last word. I'm glad my father pointed me to her poem, famed for Aussies but perhaps not so well-known elsewhere. These are the last lines.
Though earth holds many splendours,
Wherever I may die,
I know to what brown country
My homing thoughts will fly.
