China And Japan Are Trying To Mend Old Wounds: Can This Company Benefit From This Development?

The political tension between two of Asia’s largest economies, China and Japan, has always been rough. Given the long history between the two countries and the recent dispute over their claims on a few islands in the East China Sea, it is hard to be optimistic about the future relationship between them.

Yet there might just be a silver lining in the clouds: A recent Bloomberg report suggested that the leaders in the two countries are trying to mend some old wounds.

Although it is still too early to know if these efforts will result in any real and lasting improvements in the political and economic ties between China and Japan, it’d still be interesting to see how the story will evolve if only because the two countries are so important to the geopolitical and economic landscape of Asia.

For investors in Singapore, if you believe that there is a real chance that any frost between China and Japan will begin to thaw, there might be a company listed here in Singapore that’s in a good position to benefit from this development.

The logistics giant

The firm in question is Global Logistic Properties Ltd (SGX: MC0), a logistics giant with a focus on modern logistics facilities that targets the e-commerce market.

The company’s main geographical markets at the moment are China, Japan, and Brazil. Currently, trade flows between China and Japan are valued at more than US$300 billion annually.

Global Logistics Properties market share

Source: Global Logistic Properties’ June investor presentation

If there is a warmer relationship between both countries in the future, it won’t be unrealistic to think that even more trading activity can occur. Global Logistics Properties, being a leader in the modern logistics facilities market in both China and Japan (see charts above; click for larger image), is thus in a strong position to benefit from this possible trend.

Foolish Summary

It’s worth noting that what I’ve discussed above – on whether China and Japan’s relationship will improve and on the possible benefits that can accrue to Global Logistic Properties – are merely thought experiments.

But, it’s still a good practice for investors to do such thinking from time to time in order to better understand how major events happening around the world can impact the companies we are invested in.

In the case of Global Logistics Properties, a better relationship between China and Japan might be very beneficial for the company.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any companies mentioned above.