Oil, oil & water; back to basics, Sharpfokus60
Back to basics
I am a huge fan of technology as you may know. I love my Apple iPhone, iPad & watch. I don’t have a computer. Everything I do is done on new mobile technology. But. I can’t help feeling that you, me & everyone will now go through an era & some lessons of back to the basics. Here’s how that can help us invest.
Oil
Irreplaceable
The first basic is oil: Nature’s most wonderful innovation. We might need to be reminded just how irreplaceable oil is in our lives. We seem to have forgotten. The very things which we are told will be used to replace oil, themselves need oil for their production, Wind, solar, electric all require oil.
Indonesia’s driver
Indonesia has a torrid relationship with oil, but like everywhere it is oil which drives our economy. When oil prices go up here, our economy doesn’t suffer, it booms. Fuel prices went up 10X from 2001 to 2011, GDP grew 18% a year in $s & the stock market soared 15X! Most importantly it focused & controlled the government.
I am a huge fan of technology as you may know. I love my Apple iPhone, iPad & watch. I don’t have a computer. Everything I do is done on new mobile technology. But. I can’t help feeling that you, me & everyone will now go through an era & some lessons of back to the basics. Here’s how that can help us invest.
Oil
Irreplaceable
The first basic is oil: Nature’s most wonderful innovation. We might need to be reminded just how irreplaceable oil is in our lives. We seem to have forgotten. The very things which we are told will be used to replace oil, themselves need oil for their production, Wind, solar, electric all require oil.
Indonesia’s driver
Indonesia has a torrid relationship with oil, but like everywhere it is oil which drives our economy. When oil prices go up here, our economy doesn’t suffer, it booms. Fuel prices went up 10X from 2001 to 2011, GDP grew 18% a year in $s & the stock market soared 15X! Most importantly it focused & controlled the government.
Going up.
Since 2012 oil prices have declined, Indonesian prices are flat, GDP growth has slowed to 0%, the JCI has fallen in $s. Worst of all the government has gotten out of hand. Now oil prices are rising again. This has forced the government to halt. They will have to raise prices, stocks & the economy will soar again.
Palm oil
Irreplaceable
Palm oil is the 2nd basic. It cooks food for us. As the largest edible oil, it is irreplaceable & yet the world is in a false hysteria over it. Forests are not disappearing, global forest cover is increasing, orangutans are not vanishing, numbers are up 4X in 20 years, people are not getting mistreated palm oil has provided growth & income to millions,
Indonesia’s driver
Palm oil is the biggest driver of the economy we have. Indonesia was overtaken in many areas where we used to be number 1 in the world. But in Palm oil we are still the champion. We are 2X no. 2 Malaysia & largest, producer, consumer & exporter. But worryingly we have now stopped. New planting in 2017/18 is 0 & our anti growth president just imposed a moratorium.
Going up
When the world’s largest producer of the world’s largest edible oil stops planting there is a shortage coming & we are at the inflection point. According to Oil World, the shortage will start in Jan 2019, 3 months away. The 30 years trend trend of flat food prices, declining edible oil prices & a halving of palm oil prices is now over. Prices & shares will soar.
Since 2012 oil prices have declined, Indonesian prices are flat, GDP growth has slowed to 0%, the JCI has fallen in $s. Worst of all the government has gotten out of hand. Now oil prices are rising again. This has forced the government to halt. They will have to raise prices, stocks & the economy will soar again.
Palm oil
Irreplaceable
Palm oil is the 2nd basic. It cooks food for us. As the largest edible oil, it is irreplaceable & yet the world is in a false hysteria over it. Forests are not disappearing, global forest cover is increasing, orangutans are not vanishing, numbers are up 4X in 20 years, people are not getting mistreated palm oil has provided growth & income to millions,
Indonesia’s driver
Palm oil is the biggest driver of the economy we have. Indonesia was overtaken in many areas where we used to be number 1 in the world. But in Palm oil we are still the champion. We are 2X no. 2 Malaysia & largest, producer, consumer & exporter. But worryingly we have now stopped. New planting in 2017/18 is 0 & our anti growth president just imposed a moratorium.
Going up
When the world’s largest producer of the world’s largest edible oil stops planting there is a shortage coming & we are at the inflection point. According to Oil World, the shortage will start in Jan 2019, 3 months away. The 30 years trend trend of flat food prices, declining edible oil prices & a halving of palm oil prices is now over. Prices & shares will soar.
Water
Irreplaceable
What could be more valuable than even food & energy & the 3rd example of back to basics? Can you guess? What else is absolutely essential to life? Water. Water is something we haven’t talked about much in finance for a very long time, but my guess is we are about to start hearing a lot more about it from now.
Indonesia’s driver
Again, water production is an incredibly important part of the Indonesia story. Like energy & palm oil we don’t have enough of it. One of the wettest countries in the world & only about 25% of the population have access to clean piped water. Liberals seem to think you can conjure water from thin air & it’s a national asset. Nonsense, it requires huge private investment.
Going up
We are starting to see new beginnings in private investment in the water sector in Indonesia. It’s a very tricky road, but one company here is growing very fast. Listed in Singapore, my great friends Moya Asia (MHAL) have increased capacity from 400 liters per second to over 14,000 in just a few years. That’s bigger than Coke & the largest in Indonesia. Follow them.
Time to switch
Apple is bigger than the whole Indonesian economy & I love my iPhone X, but I would now switch back to basics. When last week Apple presented on using 100% renewable energy & 100% recycled metal, I know this trend has peaked: By definition you can only have more renewable & recycling when you first have more of the basics.
Have a great week!
Sebastian
Irreplaceable
What could be more valuable than even food & energy & the 3rd example of back to basics? Can you guess? What else is absolutely essential to life? Water. Water is something we haven’t talked about much in finance for a very long time, but my guess is we are about to start hearing a lot more about it from now.
Indonesia’s driver
Again, water production is an incredibly important part of the Indonesia story. Like energy & palm oil we don’t have enough of it. One of the wettest countries in the world & only about 25% of the population have access to clean piped water. Liberals seem to think you can conjure water from thin air & it’s a national asset. Nonsense, it requires huge private investment.
Going up
We are starting to see new beginnings in private investment in the water sector in Indonesia. It’s a very tricky road, but one company here is growing very fast. Listed in Singapore, my great friends Moya Asia (MHAL) have increased capacity from 400 liters per second to over 14,000 in just a few years. That’s bigger than Coke & the largest in Indonesia. Follow them.
Time to switch
Apple is bigger than the whole Indonesian economy & I love my iPhone X, but I would now switch back to basics. When last week Apple presented on using 100% renewable energy & 100% recycled metal, I know this trend has peaked: By definition you can only have more renewable & recycling when you first have more of the basics.
Have a great week!
Sebastian
