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Global Center of Gravity Heads South, Stephen King Writes in FT

The center of global economic gravity is heading south from the U.S. and Europe as a network of trading routes connecting Asia, the Middle East, Latin America and Africa develops, said Stephen King, HSBC Holdings Plc (HSBA)’s chief economist.

Writing in the Financial Times, King said 36 percent of Brazil’s trade is intercontinental “south-south” trade, and that proportion may rise well above 50 percent by 2050.

Some of the biggest mergers and acquisitions are taking place on a south-south axis; the $7.1 billion purchase of a stake in Repsol YPF SA (REP)’s Brazilian unit by China Petroleum & Chemical Corp. (386) was Brazil’s second-biggest such transaction last year, he said.

High levels of Chinese savings will lead to infrastructure investment that will transform economic conditions in Latin America, the Middle East and Africa, as has happened in China’s eastern provinces, King said.

Since China offers the world’s biggest investment market and its households account for almost as much of global consumer spending as the U.S., many southern nations see China offering better trade opportunities than the U.S. or Europe, King concluded.

To contact the reporter on this story: Alan Purkiss in London on apurkiss@bloomberg.net.

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net.

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