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Facing west from the shores of Singapore, the Pandan Strait is hard to see due to the number of boats scattered across the water. Vast container ships, tugs, and cruise liners navigate through the strait, which narrows to one and a half nautical miles at its tightest point.

The bustling activity through this crucial trading route is emblematic of the growth of Asian economies, which are increasingly trading with each other.

Countries like Vietnam and Indonesia are experiencing significant economic growth, with expanding domestic markets and a growing focus on high-tech industries, already seen in countries like Taiwan, South Korea, and India (Chart 1). This diversification within Asia is creating a more robust and interconnected regional economy.

Chart 1. Asian companies becoming global leaders in technology

Developing Asia & shipping

Shipping is the lifeblood of Asian economies. Container shipping is the primary mode of cargo transportation between countries separated by wide bodies of water.

It’s no surprise that, until the 18th century, Asia was the center of world trade. Several factors, including an increasing number of free-trade agreements, regional integration, and the rise of the Asian consumer, have driven the resurgence of Intra-Asian trade.

Developing Asia economies handle 62% of the world’s port container traffic.[1]

Today, Developing Asia economies handle 62% of the world’s port container traffic, and these links continue to expand.1 According to the International Monetary Fund, Intra-Asian trade will constitute approximately 40% of global trade by 2030.2

The rise of Intra-Asian shipping

The surge in intra-Asian trade necessitates a robust and efficient shipping industry. Here's how this sector is adapting:

  • Growth of regional shipping hubs
    Ports in Singapore, Shanghai, and Hong Kong have traditionally dominated Asian shipping. However, ports in Vietnam, Thailand, and Indonesia are experiencing significant growth, catering to intra-regional trade routes.
  • Investment in shipping infrastructure
    Governments and private companies are investing heavily in expanding port capacity, improving logistics networks, and developing new shipping routes within Asia.
  • Technological advancements
    Automation and data analytics are being implemented to optimize shipping operations, making them more efficient and cost-effective.

A green shipping revolution

The global shipping industry is responsible for as much as 3% of the world’s carbon dioxide (CO2) emissions. In July 2023, the International Maritime Organization’s Marine Environment Protection Committee announced the industry’s ambition to achieve net zero emissions by 2050.3 This bold goal will drive demand for new ships powered by cleaner, less carbon-intensive fuel.

We believe this presents an exciting opportunity for investors as we enter a new multi-year upcycle for shipbuilding.

We believe this presents an exciting opportunity for investors as we enter a new multi-year upcycle for shipbuilding. Korean firms, especially the world’s largest shipbuilding company by capacity headquartered in Seoul, are at the forefront of developing vessels that run on alternative fuels.

The shift towards greener vessels will necessitate more complex engineering. We believe this will play into Korean firms’ scale and technological advantage (Chart 2). While investors have historically viewed the industry with skepticism, considering it is value-destroying, the emergence of these innovative vessels heralds a positive shift in margin outlooks.

Chart 2. Korean shipbuilders are well-placed for alternative fuel vessels

Final thoughts

The Asian economic landscape is undergoing a significant shift. While traditional East-West trade remains essential, we believe the rise of Intra-Asian trade presents a compelling opportunity for investors.

And the future of Asia is intertwined with the growth of Intra-Asian trade and shipping.

Investors in emerging market equities can capitalize on this trend by focusing on companies that cater to this booming intra-regional exchange, from exporters to logistics players, investors can capture the long-term potential of Asian economies.

1 Fact sheet #15: Maritime transport indicators. United Nations Conference on Trade and Development. UNCTAD Handbook of Statistics 2022 - Maritime transport, November 2022. https://unctad.org/system/files/official-document/tdstat47_FS15_en.pdf.
2 Review of Maritime Transport 2023: Facts and Figures on Asia. United Nations Conference on Trade and Development. Review of Maritime Transport 2023: Facts and Figures on Asia, September 2023. https://unctad.org/press-material/review-maritime-transport-2023-facts-and-figures-asia.
3 "Why shipping faces a showdown over greenhouse gas." BBC News, July 2023. https://www.bbc.com/news/science-environment-66064838.

Important information

Projections are offered as opinion and are not reflective of potential performance. Projections are not guaranteed, and actual events or results may differ materially.

Foreign securities are more volatile, harder to price and less liquid than U.S. securities. They are subject to different accounting and regulatory standards, and political and economic risks. These risks are enhanced in emerging markets countries.

AA-170724-180752-1

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Important Risks

The abrdn Gold ETF Trust, abrdn Silver ETF Trust, abrdn Precious Metals Basket ETF Trust, abrdn Platinum ETF Trust and abrdn Palladium ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.

Commodities generally are volatile and are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Please refer to the prospectus for complete information regarding all risks associated with the Trusts. Shares in the Trusts are not FDIC insured and may lose value and have no bank guarantee.

The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including:

A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares;

Investors’ expectations with respect to the rate of inflation;

Currency exchange rates;

Interest rates;

Investment and trading activities of hedge funds and commodity funds; and

Global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the Shares. Should there be an increase in the level of hedge activity of the precious metal held by the Trusts or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.

Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the Custodian or Sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.

The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the Trust’s precious metal that is not covered by insurance.

Commodities generally are volatile and are not suitable for all investors.

Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or "authorized participants" may trade directly with the Trusts, typically in blocks of 25k to 100k shares.

Commodities generally are volatile and are not suitable for all investors. This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. Please click here to review the prospectus.

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ALPS Distributors, Inc. is the distributor for abrdn ETFs.

ALPS Distributors, Inc. is not affiliated with the companies of abrdn.

'40 Act Fund Disclosure:

An investor should consider the investment objectives, risks, charges and expenses of the ETFs carefully before investing. To obtain a prospectus containing this and other important information, call 1-844-383-7289 or visit www.abrdn.com/us/etf. Read the prospectus carefully before investing.

Fund Risk: There are risks associated with investing including possible loss of principal. Commodities generally are volatile and are not suitable for all investors. There can be no assurance that the Fund’s investment objective will be met at any time. The commodities markets and the prices of various commodities may fluctuate widely based on a variety of factors. Because the Fund's performance is linked to the performance of highly volatile commodities, investors should consider purchasing shares of the Fund only as part of an overall diversified portfolio and should be willing to assume the risks of potentially significant fluctuations in the value of the Fund. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. The Fund’s return may not match the return of the index.

Through holding of futures, options and options on futures contracts, the Fund may be exposed to (i) losses from margin deposits in the case of bankruptcy of the relevant broker, and (ii) a risk that the relevant position cannot be close out when required at its fundamental value. In pursuing its investment strategy, particularly when rolling futures contracts, the Fund may engage in frequent trading of its portfolio of securities, resulting in a high portfolio turnover rate.
As a "non-diversified" fund, the Fund may hold a smaller number of portfolio securities than many other funds. To the extent the Fund invests in a relatively small number of issuers, a decline in the market value of a particular security held by the Fund may affect its value more than if it invested in a larger number of issuers. The value of Shares may be more volatile than the values of shares of more diversified funds.

During situations where the cost of any futures contracts for delivery on dates further in the future is higher than those for delivery closer in time, the value of the Fund holding such contracts will decrease over time unless the spot price of that contract increases by the same rate as the rate of the variation in the price of the futures contract. The rate of variation could be quite significant and last for an indeterminate period of time, reducing the value of the Fund.

Changes in the laws of the United States and/or the Cayman Islands, under which the Fund and the Subsidiary are organized, respectively, could result in the inability of the Subsidiary to operate as intended and could negatively affect the Fund and its shareholders.

To the extent the Fund is exposed directly or indirectly to leverage (through investments in commodities futures contracts) the value of that Fund may be more volatile than if no leverage were present.

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The abrdn Bloomberg Industrial Metals K-1 Free ETF is new and has limited operating history.

“Bloomberg®” and “Bloomberg Commodity Index Total ReturnSM,” “Bloomberg Commodity Index 3 Month ForwardSM” and “Bloomberg Industrial Metals Subindex Total ReturnSM” are service marks of Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited (“BISL”), the administrator of the indices (collectively, “Bloomberg”) and have been licensed for use for certain purposes by abrdn ETFs Advisors LLC. Bloomberg is not affiliated with abrdn ETFs Advisors LLC, and Bloomberg does not approve, endorse, review, or recommend abrdn Bloomberg All Commodity Strategy K-1 Free ETF (BCI), abrdn Bloomberg All Commodity Longer Dated Strategy K-1 Free ETF (BCD), and abrdn Bloomberg Industrial Metals K-1 Free ETF (BCIM). Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to Bloomberg Commodity Index Total Return, Bloomberg Commodity Index 3 Month Forward” and “Bloomberg Industrial Metals Subindex Total Return".

Please see the current prospectus, www.abrdn.com/us/etf for more information regarding the risk associated with an investment in the Funds.

S&P 500: The S&P 500 Index is the Standard & Poor’s composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices.

Standard Deviation: Standard deviation is a statistical measure of the extent to which returns of an asset vary from its average.

Bloomberg Commodity Index: The Bloomberg Commodity Index (BCOM) is a broadly diversified commodity price index distributed by Bloomberg Indexes.

Discount- A situation when the share price of a fund trades below its net asset value.

Premium- A situation when the share price of a fund trades above its net asset value.

The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market.

Annualized Volatility is a statistical measure of the dispersion of returns for a given security or market index

Beta is a measure of the volatility, or systematic risk, of an individual stock in comparison to the unsystematic risk of the entire market

Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk
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