As investors, we all look for opportunities where there is a clear, coherent and compelling rationale for investing. Ideally, the opportunity should possess strong growth characteristics, and limited downside should our thesis not eventuate after a period of time. We look at one such thematic, and three microcap exposures to it.
Large, disruptive changes within industries or sectors are generally driven by the confluence of technologies, political incentives, private enterprise and human nature. Certain commodities can experience huge changes in price depending on industry supply and demand dynamics.
One historic example: Iron oreA good case in point is the Iron Ore industry. This industry was typified by long-term supply contracts, no spot market, and relatively stable demand and supply dynamics. This was the case until Chinese steel production growth began to rise rapidly around 2003 from its previous incremental growth; driven by steel demand from increasing urbanisation.
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