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10 reasons-to-consider-commodities

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JPM Guide 10 reasons to concider commodities for your portfolio

JPM Guide 10 reasons to concider commodities for your portfolio

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  • 1. Ten reasons to consider commodities1) Global growth is picking up Commodities have suffered in the low growth environmentof the last few years, but expectations for the globaleconomy are now improving.2) China still needs infrastructure As people continue to move to urban areas, the Chinesegovernment is investing heavily in the smaller cities and inmass transit systems.3) Other emerging markets need to play catchup Demand from rapidly urbanising economies such asIndonesia, the Philippines, Bangladesh and Vietnam isexpected to surge over the next decade.4) India has lagged behind Compared with China, India has massively underinvestedin infrastructure. It must now catch up to support an urbanpopulation that is expected to almost double between nowand 20301.5) India urgently needs better transportand housing Around 350-400km of new subway and 700-900 millionsquare metres of housing and commercial development willbe needed every year from now to 2030.16) Rising Chinese consumption will create demandfor oil and gas China has historically consumed much less oil than westerneconomies, but demand is expected to grow as the newmiddle classes buy cars.7) Growing emerging market wealth means greaterdemand for luxuries Diamonds, gold and other precious metals are all set tobenefit from the appetite for luxury goods.8) Dwindling supply also supports prices The copper price has risen much more than the aluminiumprice over the last decade, even though demand foraluminium has grown faster. The reason? Supply. Copperminers have struggled to increase production, whilealuminium is plentiful.9) New supply is hard to come by New reserves of many commodities are in harder-to-reachplaces and are more expensive to extract, providing long-term support for prices.10) Share prices look attractive With the natural resources sector currently unloved byinvestors, shares in well-managed companies may beavailable at attractive prices.All information as at 30 April 2013 unless otherwise statedThe natural resources sector has fallen out of favour amid worries over Chinese growth and disappointingreturns. But with the global economy recovering and the long-term case for commodities still strong, therecent sell-off presents a compelling opportunity for long-term investors.1 India’s urban awakening: Building inclusive cities, sustaining economic growth’, McKinsey Global Institute, April 2010This material provides general information only and has been produced for information purposes only. It is based on information believed to be reliable at the time of writing but is subject tochange without notice and we do not guarantee its accuracy. The opinions and views expressed here are those held by JP Morgan Asset Management at the time of publication, which are subjectto change and are not to be taken as or construed as investment advice. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinionexpressed in this material. The value of investments and the income from them can fall as well as rise and investors may not get back the full amount invested. Past performance is not a guide tothe future. Issued by JPMorgan Asset Management Marketing Limited which is authorised and regulated in the UK by the Financial Conduct Authority. Registered in England No: 288553. Registeredaddress: 25 Bank St, Canary Wharf, London E14 5JP. LV - JPM5897 04/13For more information on the long-term growth potential of commoditiesspeak to your Financial Adviser

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