Tuesday, March 23, 2021

"The wonder material we all need but is running out" (think Singapore)

From the BBC:

Climate change, capitalism and disease are threatening to strike a mortal blow to the world's rubber trees. Do we need to find alternative sources of rubber before it's too late?

Natural rubber is a uniquely tough, flexible and highly waterproof material. It puts tyres on our vehicles, soles on our shoes, it makes seals for engines and refrigerators, insulates wires and other electrical components. It is used in condoms and clothing, sports balls and the humble elastic bands. Over the past year it has played a pivotal role in the pandemic in personal protective equipment worn by doctors and nurses around the world.

In fact, rubber is deemed to be a commodity of such global importance that it is included on the EU's list of critical raw materials.

Unfortunately, there are signs the world might be running out of natural rubber. Disease, climate change and plunging global prices have put the world's rubber supplies into jeopardy. It has led scientists to search for a solution before it's too late.

But how has such an important commodity fallen into such peril in the first place?

The global supply of natural rubber – around 20 million tonnes per year – is produced almost entirely by fragmented smallholders working tiny plots of land in tropical forests. Millions of these workers tend to plantations in Thailand, Indonesia, China and West Africa, carefully stripping bark from the trees to extract a milky white sap which is shaped into sheets and dried in the sun. Between them, these farmers provide 85% of the world's natural rubber supply.

But this fragile supply is under threat. A native of the Brazilian rainforest, the rubber tree Hevea brasiliensis is no longer grown commercially in the country due to the prevalence of South American leaf blight, a catastrophic pathogen which killed off the country's rubber industry in the 1930s. Strict quarantine controls have kept the disease contained to the South America for now, but arrival in Asia is thought to be almost inevitable.

In the meantime, farmers elsewhere in the world still face local pathogens such as white root disease and other leaf blights that have made the leap from neighbouring oil palm plantations. Climate change is also exerting its toll – Thailand's rubber production has been hit by droughts and flooding in recent years, with the latter also further spreading disease-causing microbes across growing regions....


And why, wary yet curious reader asks, think Singapore? 

From Global Financial Data, December 2018:

Singapore: The Crazy, Rich Rubber City-State 

....Singapore Before Singapore. Stamford Raffles founded Singapore as a trading post of the British East India Company in 1819.  The city became part of the Straits Settlements in 1826 and its capital in 1836. The British were defeated in the Battle of Singapore on February 15, 1942 when 60,000 British troops surrendered to the Japanese in one of the worst defeats of British forces in history. The Japanese surrendered on August 15, 1945, but the failure of the British to protect Singapore from the Japanese lowered Britain’s standing in the eyes of Singaporeans. Malaysia and Singapore were granted self-government in 1959, but because of economic and political differences, Singapore seceded from Malaysia and became an independent republic on August 9, 1965.

The Malayan Stock Exchange was set up on May 9, 1960.  Floors for trading shares were set up in both Kuala Lumpur and in Singapore.  After Singapore seceded, the structure of the stock exchange remained the same, but its name was changed to the Stock Exchange of Malaysia and Singapore.  When currency interchangeability was terminated between Malaysia and Singapore in 1973, the Stock Exchange of Singapore separated from the Kuala Lumpur Stock Exchange.

As this brief history shows, there was no trading of Singapore stocks in Singapore before 1960.  Singapore stocks were traded in London or not at all. GFD has been able to collect data on a handful of Singapore stocks in order to put together an index of Singapore shares before local trading began.

Singapore Shares Before Independence
Singapore, as well as most of Malaysia, was a center for rubber production before World War II. The largest of these companies was the Straits Rubber Co., Ltd. which was registered in 1909, reorganized in 1919, and was acquired by Consolidated Plantations in 1972. Two other Singapore rubber companies registered in London were the Bukit Sembawang Estates and the Singapore United Rubber Plantations.  These three companies made up the Singapore shares that traded in London before 1960. In essence, GFD’s Singapore stock index is an index of rubber companies. The market capitalization of these three companies remained small peaking at $2 million in 1920, and remaining below $1 million between 1921 and 1957.

There is a gap in the index between 1957 and 1961 and after 1961, the Singapore Traction Co., Bajau Rubber and Produce Estate were added to shares of the Straits Rubber Co. to represent Singapore stocks in London.  The price index of Singapore stocks from 1915 until 1957 is provided below in Figure 1....