Reshoring supply chains: What does it mean for investors?
Of all the lessons learned during the pandemic — wash your hands thoroughly, avoid crowded lifts, working from home can be productive — perhaps the most consequential lesson for companies is now obvious in hindsight: relying on single links in the global supply chain was a mistake. Major components of the supply chain fractured during the COVID-19 crisis, resulting in shortages of everything from medical supplies and equipment to furniture and auto parts. Geopolitical events also entered the fray as US-China tensions and Russia’s invasion of Ukraine underscored the risks of relying too much on one place for critical supplies, including energy, food and computer chips. “With the rapid spread of globalisation over the past few decades, companies moved their manufacturing operations to the cheapest and most efficient countries,” says portfolio manager Julian Abdey. portfolio manager “That was great for company profits and consumer prices,” he continues. “But what we found out more recently is that when supply chains get disrupted it can cause real problems. For example, Europe has realised it was too dependent on Russia for natural gas. And I think the same is true for other products like computer chips. The world is too dependent on Asia, and Taiwan in particular, for semiconductors.” This material is a marketing communication Past results are not a guarantee of future results. The information included on this page is neither an offer nor a solicitation to buy or sell any securities or to provide any investment service. Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. The American Funds are not registered for sale outside of the United States. While Capital Group uses reasonable efforts to obtain information from third-party sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information. The information included in this page is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. The information included in this page has been produced by Capital International Management Company Sàrl (“CIMC”), which is regulated by the Commission de Surveillance du Secteur Financier (“CSSF” –Regulator of the Luxembourg financial industry) and its affiliates, as appropriate (“Capital Group”). Article originally published by Capital Group. FE fundinfo is not responsible for its content or accuracy and may not share the author’s views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise. More Articles
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