How to Invest in the One Belt, One Road Initiative

China’s one belt, one road initiative (OBOR) may be one of the largest projects ever attempted. It aims to connect countries across Europe and Asia via a vast network of railways, ports, roads, and pipelines.

The enormity of the project can be appreciated just by looking at some of the numbers behind the project. There will be 65 countries involved in this project, accounting for up to 60% of the world’s population. China’s President, Xi Jin Ping, has already promised US$124 billion to kick-start the initiative. Furthermore, China’s policy banks have pledged US$200 billion into OBOR.

The total anticipated investment for the project is between US$4 trillion and US$8 trillion.

Numerous companies globally stand to benefit from this enormous endeavour. With this in mind, here are three industries in Singapore that might benefit from OBOR.

Financial industry

Professor Chung Chi-Nien, NUS business school professor, believes that the financial industry stands to benefit from the initial stages of the project.

Construction firms will require enormous financing from banks. Singapore with the stable political climate and being the first offshore Renminbi center outside of China is well positioned to capitalise on this.

Piyush Gupta, a chief executive at one of the local banks in Singapore, said that he believes that despite most of the capital investment being taken up by foreign direct investments and by debt capital markets, there will still be a demand for bank financing.

Commodity industry

With the massive influx of construction and development projects surrounding the initiative, commodity prices could rise with the increasing demand. The railway tracks and pipe building could potentially bolster steel demand by 150 million tonnes.

Commodity companies that are related to oil and iron are more than likely to benefit as more and more projects begin.

Trade industry

As the initiative takes shape, the trade routes and transport infrastructure will facilitate trade between South East Asia and China.

Not only will this have a direct impact on trade in Singapore, but the growth in regional economies will also help to propel Singapore’s economy

Tan Kong Yam, professor of economics in NTU, found in an analysis that a one percentage point growth in Indonesia between 2000 and 2010 yielded a 0.26 multiplier for growth in Singapore.

The Foolish bottom line

Many industries stand to profit as the first phase of the OBOR initiate takes place this year. Investors who wish to capitalise on the opportunities afforded due to this initiative may wish to look into these industries.

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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 contributor Jeremy Chia doesn't own shares in any companies mentioned.