Horizon Newsletter – week 18 // 2019
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
Do you have a question about the digitalization of consumer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with your questions and remarks. Your feedback will help us to drive our research agenda.
Africa is set to become the world’s largest trade area
Earlier this month, Gambia approved the ratification of the Africa Continental Free Trade Agreement (AfCFTA). Having reached the 22-country threshold, AfCFTA can now come into force. As the future largest free trade area, AfCFTA can have global impact by showing unity and multilateralism in a world of increasing protectionism. Moreover, it will have significant impact on the continent itself. In 2019, Africa will be home to several of the world’s fastest-growing economies, however, Africa’s intra-continental trade is less than 15% of total African exports (in comparison to 67% for intra-European trade). The agreement could boost intra-African trade by 52% until 2022. More movement of goods or people will have to start with better connectivity. Today, transiting through Europe is often easier than travelling directly between African neighboring countries. Africa’s first cross-continental, high-speed train is now in the making and African Union experts envision a high-speed rail network by 2063, linking all African capitals and commercial centers. These shifts towards improved infrastructure and increased trade will boost the African continent, by making it more autonomous and independent of other superpowers.
Greenland, the Arctic hub
As we predicted in January, the Arctic is emerging as a strategic hotspot with Greenland in the middle. As Greenland is exploring pathways to full independence, it has attracted Chinese investments in energy and mining, while the U.S. seeks to help develop Greenland’s airports. The emergence of Greenland shows the growing importance of the Arctic in two areas: energy and trade. The region has vast energy resources: an estimated 30% of gas and 15% of oil reserves are located there. Currently, Russia is winning the race to develop Arctic energy infrastructure. In terms of trade, ships already sail from East Asia to Europe across the shorter Arctic route. As the Suez Canal and Panama Canal showed, new trade routes create new hubs (e.g. Greenland) and threaten existing ones (e.g. Singapore). To secure access to energy and trade, countries will increase their military presence: the U.S. sent the first aircraft carrier to the Arctic in 27 years and Russia is building new bases. In the future, the Arctic Council could become an important institution to manage rising military tensions.
Esports demonstrates the future of advertising
Esports advertising is growing as an increasing number of brands are realizing esports provides an alternative audience of affluent male Millennials and Gen Z’s. As gaming-related brands found out, the esports ecosystem has created a devoted fan base that is supportive to brands that are helping esports grow. More and more non-endemic brands (i.e. not related to gaming) are joining the party. Nevertheless, brands should be well aware that traditional advertising methods (such as product placement or digital banners) easily annoy this critical audience. Instead, fans expect brands to contribute to the experience. For instance, as part of its sponsorship for the League of Legends European Championship, Shell created a loyalty program that allowed fans to convert Shell ClubSmart points into game points and skins. DOTA2 sponsor Mercedes Benz, meanwhile, showed it understood the esports audience when it took part in the mocking internet meme created about their sponsorship. These examples show that it is still possible to reach younger audiences; moreover, it provides brands with a potential playbook on the future of advertising.