Here is a brief commentary on the possible economic impact of the crisis in Afghanistan and the approach that global investors should take.

The fast-moving story of what is going on in Afghanistan is clearly one of the largest geopolitical stories of the day. In the short term it isn’t easy to know how events will affect markets, beyond perhaps a heightening of risk concerns. In the medium to longer term, however, there is bound to be speculation about, for example, the natural resources in the mountainous countries: copper, gold, oil, natural gas, uranium, bauxite, coal, iron ore, rare earths, lithium, chromium, lead, zinc, gemstones, talc, sulphur, travertine, gypsum and marble. The control of those resources, and the influence of countries such as China, on this area, is going to be a major concern.

To discuss these issues is Dominic Armstrong, chief executive of Horatius Capital, a fixed income investment house. 

In Afghanistan we are now faced with Taliban 2.0. This is a new version of Taliban 1.0 that was ejected in 2001. Like a powerful new virus Taliban 1.0 was ultimately unsuccessful - it effectively killed its host and thus sowed the seeds of its own demise. In 2001, the Afghan Taliban ran the country chaotically, relying on opium crops and terrorism and localised barony for its governance and income. No-one would touch it - or them. They were isolated and cut off from the international community, defiantly answering to no-one, unaccountable and defensive - it was so extreme it was invaded and displaced. 

Taliban 2.0 is a new, adapted variant of the same virus that may have learned to keep its host alive. Due to the rapid vacuum left by a combination of circumstances, the Taliban have taken power relatively without violence. That has completely removed the justification of rule by violence - but the world is waiting to judge them by their standards of 20 years ago. Their legitimacy hangs in the balance, internationally and domestically - and that legitimacy will determine the nature of their governance. And here's the thing. They know it. It's evident that they know it - and their behaviours and perceptions are being affected, either unwittingly or by pragmatic compulsion. 

It is likely to be helped by China which has its eye on Afghanistan’s natural resources - particularly rare earths. Expect China to fund the infrastructure investment that will allow mineral extraction. The risk for China will be that the Afghanistan situation factionalises again and the Taliban won’t be able to deliver stable security to allow minerals out in the face of competing warlords.

Meanwhile Russia and Putin is watching and waiting, knowingly having fallen to number four on President Biden’s problem list (behind China, COVID and Afghanistan), meaning that attention is directed elsewhere. That leaves plenty of room for mischievous manoeuvre.

How do investors play this unlovely outlook? Exposure to the price of lithium is one way. Lithium is used in batteries and electronics. Exposure can be via ETFs and derivatives, and lithium miners (such as there are). But lithium is not a traded commodity itself.

(The editorial team welcome commentary from readers on this important topic. Clearly, given the rapid movement of events, certain commentaries will be quickly rendered out of date, so we are particularly interested in longer term thoughts about what may ensue. Email the editors at tom.burroughes@wealthbriefing.com and jackie.bennion@clearviewpublishing.com)