Our strategic view
The world has unique opportunities to create unimaginable wealth, and our investments are founded on the firm belief that the world will grasp these opportunities. Every year millions of people leave poverty as a result of this creativity. How is this possible?
We live in a shrinking world. The IT revolution and increasing trade deregulation among the countries in the rest of the world (excluding developed markets) will make the world spin more smoothly. New trading organizations like BRICS, which now includes more than 50 % of the world’s population and the Belt and Road initiative, with its newly built infrastructures, will make countries along these trade routes much more prosperous and will decrease poverty. Specialization and economies of scale, using different countries comparative advantages, will also help to boost trade and wealth creation in the long run.
Trade is one of the most powerful growth engines in the world. Increasing trade and robust communication tools will allow know-how to be spread far and wide. Fast. Emerging Markets will capitalize on these developments.
Sometimes politicians try to put a spanner in the works, but we believe that these kinds of measures will fail, for the simple reason that trade always is beneficial for all parties involved. The work of the politicians in the developed markets (i.e. EU and USA) are especially important to criticize. They regulate, bureaucratize and tax development which don’t just counteracts the development for other poorer countries, but mainly destroys their own economies and countries.
However, one reason for us to believe in a continued successful global progress is the spread of capitalism and market economy to the developing countries. The global economy thereby enjoys better resource allocation, unleashing entrepreneurial power and enhances creativity.
It is in this world of free trade and growth that many business opportunities emerge and it is here we have our strategic focus. We seize these opportunities by pursuing business in the following areas:
Invest in those emerging markets that are best suited to copy more genuine Western business models and promote market reforms, thus achieving faster growth at less risk. People in these regions are hungry for progress and eager to reach higher living standards. They are the greatest bene¬ficiaries.
Invest in Asia, the center of the biggest industrial¬ization the world has ever witnessed. Countries like Indonesia, the Philippines and Thailand. Low leverage in this region also creates opportunities for huge infrastructure investments that bring about huge productivity gains. We also invest in other parts of the world, such as Mexico, Kenya and Rwanda for the same reasons. Countries that by releasing the forces of the free market, create possibilities to generate prosperity for the people. Markets along the Belt and Road initiative, on the Asian continent, such as Russia, Georgia and Kazakhstan. We anticipate that trade between these countries will create wealth for their people. Some of the countries are also rich on both energy and commodities, which will be important because of high growth and more electrification.
There are however threats to these positive developments. Factors, such as protectionism, increased taxation on the wealth creators, labor and capital, as well as unnecessary and destructive and bureaucratic regulations, more red tape and and unsound environmental conclusions, can soon plunge people back into poverty.
When everyone thinks alike, everyone is likely to be wrong.
Humphrey B. Neill: Art of Contrary Thinking (1954)
Tomorrow is a better place
At Dunross, we find joy and comfort in the fact that the world is slowly but surely becoming a better place to live in, and contrary to what many people believe, the world is not getting worse. Proof of this is the fact that 85 million people each year, through market economy and globalization, have left poverty during the past 15 years.
China is a good illustration of this progress of poverty reduction in the world. Although Dunross due to its non-existent democracy and non-robust institutional and legal framework, has chosen not to invest in China, the country has still managed to develop remarkably well. Say what you will about the problems in China, but poverty has been dramatically reduced, and in our opinion, it is a result of the gradual Chinese implementation of market economy and capitalism. However, one must also acknowledge that China’s population is aging fast.
Hence, even if we see the possibility for continued implementations of further market economic reforms, China will structurally approach a slower growth rate than historically, maybe even as low as 4–5 percent. And yes, these countries do have major environmental problems, but do not forget that it is incredibly difficult to address these environmental problems without first lifting a large part of the population out of poverty. Therefore, we are convinced that the big environmental issues now facing China has been and will be addressed and solved.
Below, please find some facts about our world of today that hopefully will inspire you and give you a more optimistic outlook on the current state of our world, and instill more confidence in the ability of the human race to progress:
- The number of people killed in wars since the Second World War when 300 people per 100 000 died, has fallen to 10 in every 100 000 during the 1970s, and is currently down to 1 person in every 100000.
- The explosive growth of the global population that has been a big concern for many people for many years also seems to be moving towards a solution, even though we are living much longer and standards of living have dramatically improved.
- The average life span in the world is continuously rising.
- Between 1920–1980, on average, 395 people per 100 000 died of hunger each year. Today, that same figure is fewer than 3 people per 100 000. Farming and food production – even per capita – is rising rapidly in the world, and has nearly doubled since the 1980s. (OECD-FAO)
- Illiteracy in the world is falling, which is leading to better communication and better functioning societies (UNESCO)
- The world is increasingly being governed by democratically elected leaders. This strengthens participation in society and reduces the risks of war. Unfortunately, the development goes in a less good direction in the developed world.
- Between 1920–1929, 241 people per one million died each year due to weather-related accidents globally, compared with 5 per one million a year over the last ten years.
- In 1975, the average car travelled 21 km per gallon of petrol compared with 42 km today, and the fuel efficiency is accelerating, with new cars achieving up to 100 km per gallon. With the introduction of the electric and hybrid cars these figures are even better today.
- Google and the internet are for free. 20 years ago, the internet barely existed at all. An infinite number of other inventions are also free, or have become far better, at prices that are just a fraction of what they once were.
The list of positive developments is much longer, and yes, the world faces many challenges and significant problems still remain in many parts of the world, particularly in Africa and the Middle East. However, the point is that humans are fantastic creatures that constantly overcome such new challenges. But as humanity develops also new challenges erupt. What about freedom of speech for example? We see many threats here, for example from like Google, Facebook, YouTube, censuring people’s free expressions. With Trump’s election win, these risks have however been reduced, but in EU politicians still talk about increasing censorship. We see big risks of the State, mainstream media and the political establishment joining forces not for the people but over and above the people. Wealth is not just about money; it is about freedom as well.
Of course, this does not change our optimistic view, humanity will prevail in a good and prosperous way.