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Tomorrow belongs to those who hear it coming: ASI

Appearing at the Australian Institute of Superannuation Trustees' ASI Conference, BNP Paribas Global Directions managing director Keith Suter took a dive into the pressures currently facing Australian trustees and investors, saying contingency planning is key.

Speaking on "the new world disorder", Suter highlighted the three immediate impacts of Russia's invasion of Ukraine and the need for investors to learn how to "scenario plan".

"The Russian invasion of Ukraine has forced a more sombre appraisal of the notion of the world's progress," Suter said.

"Ukraine represents the best-situated, most productive piece of Russia's former Soviet empire and so the logical place for Putin to start rebuilding the Russian empire.

"Optimism has now been replaced by pessimism."

According to Suter, a direct impact of the invasion was the disruption of grain and sunflower oil (Russia and Ukraine product 70% of the world's sunflower oil exports), as shippers can't get insurance to move items in and out of Russian and Ukrainian ports.

This was followed by the disruption of fertilizer supplies, so there will be reduced yields, and the disruption of Russian supply of energy to the world market; it is the world's largest exporter of natural gas, most of which is sold to Europe.

"It's important to note that the world had crises even before the invasion, including COVID, localised arm conflicts, and climate change heat waves," Suter said.

"However, there are no quick and easy replacements to Russian exports."

He added that even if the fighting stopped this morning, there would be all the problems of unexploded ordnance: it will take years for Ukraine to recover.

However, Suter said Australia can play a role in the new world order.

"Of course, depending on how long the crisis continues, Australia may have extra markets to fill the vacuum caused by the Russian/Ukrainian supply issues," Suter said.

"It seems to me that we can develop a whole range of new industries.

"Coal and iron can keep us going for a while, but coal is becoming a bit of a difficult export commodity. We need to be developing our rare earths - who knows what's in the Australian terrain?"

When it comes to assessing the geopolitical framework for the outlook ahead, Suter said that it will be important for investors and trustees to plan for everything.

"You can't necessarily predict the future, but you can have contingency plans for whatever the future throws at you; and be more willing to think about the unthinkable," Suter said.

"Tomorrow belongs to those who can hear it coming."

Financial Standard is the official media partner of AIST's Super Investment Conference for 2022. Click here to subscribe to AIST's newsletter.

Read more: RussiaAustraliaUkraineASI ConferenceAustralian Institute of Superannuation TrusteesBNP Paribas Global DirectionsKeith Suter