(Bloomberg) -- Commodities will beat stocks in China, Brazil and other emerging economies this year as inflationary pressure curbs equity gains, said Societe Generale.
Growth of raw-material consumption in emerging economies led by China will be sustained even as prices advance, said commodity analyst Jeremy Friesen, who was a strategist at Morgan Stanley in New York before joining the Paris-based bank. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 14 percent last year as the Dow Jones- UBS Commodity Total Return index climbed 17 percent.
“Prices of commodities will have to go up to rationalize the investments to produce commodities as well as consumption,” Friesen said yesterday in a phone interview from Hong Kong. “Corporates are going to have to deal with how to be profitable and yet still facing higher costs.”
Investors have pulled money from funds tracking developing- nation stocks because of concern about stock valuations and inflationary pressure, EPFR Global said last week. Outflows totaled $7 billion from all emerging-market equity funds during the week ended Feb. 2, the most in three years, it said. Energy and commodity-related funds attracted more investment, it said.
China’s consumer prices advanced 3.3 percent last year, breaching a government target of 3 percent. The January rate may have quickened to 5.4 percent, according to the median estimate of 10 economists surveyed by Bloomberg News, from 4.6 percent in December. Inflation in Indonesia, Southeast Asia’s biggest economy, was 7.02 percent last month, a 21-month high, the Central Bureau of Statistics said.
Copper, Cotton
Copper climbed to a record $10,160 a metric ton yesterday, boosted by expanding manufacturing activity in China and the U.S., the top consumers. Cotton advanced to an all-time high of $1.8122 per pound last week and palladium, used in autocatalysts, increased to the highest level since 2001.
The advance in commodity prices will be sustained “if policy makers continue to be leaning onto the stimulant side, which I believe they will continue to be,” Friesen said, referring to low interest rates and measures to boost growth.
No comments:
Post a Comment