What’s China doing in Sri Lanka? Officially, it’s building the country’s infrastructure. Like the ports of Colombo and Hambantota, which have left the country heavily indebted.
Unofficially, China is setting up outposts in the Indian Ocean as part of Beijing’s broader strategy to secure the passage of Middle East oil through the Strait of Malacca and counter American naval hegemony in the region.
China has increasingly come to rely on the Middle East for its oil needs, which must be shipped through the Strait of Malacca to reach its shores. This means that Beijing runs the risk of being cut off from Middle East oil supplies should America blockade the Strait -- in the event of a further escalation of South China Sea disputes or an outright war between America and China.
That could explain why Chinese submarines have begun suddenly and repeatedly showing up in the Chinese-operated South Container Terminal in the port of Colombo.
And why China has been telling India to stay off Sri Lanka.
That’s something investors in Southeast Asian markets should keep a wary eye on, as it opens yet another front between the two Asian giants, which could drag in America.
And that raises the geopolitical risk of investing in the region. Though Chinese and Indian markets seem to be ignoring these risks, for now.
China’s And India’s Equities
Index/Fund
|
12-month Performance
|
5-year Performance
|
iShares India (INDY)
|
21.92%
|
34.18%
|
IShares China (FXI)
|
18.90
|
7.90
|
Finance.yahoo
No comments:
Post a Comment