Aussie resources firms to benefit from commodity prices
Although external factors may cause a first rate rise in Australia before August, 2022, the current geopolitical tensions position Australian resources companies well to benefit from elevated commodity prices, according to VanEck.
The company’s portfolio manager, Cameron McCormack, stressed that Australia was a major exporter of liquefied natural gas (LNG) and iron ore prices also reached a six-month high, helped by growing hopes of improved demand in China with National People’s Congress (NPC) setting a 5.5% gross domestic product (GDP) growth target for 2022.
These higher prices would then equate to stronger earnings for resources companies.
At the same time, he said, the US CPI, which reached a 7.9% annual rate, could potentially pass 9% in the following months as it had to yet fully account for the spike in global commodity prices and the broader implications of wide reaching sanctions against Russia.
“Stagflation is now a possibility – rising costs against stagnant economic growth. Investors need to prepare for this scenario.
“With oil briefly passing US$125 a barrel this week for the first time since 2008 and UK gas price futures jumping 39% since Russia invaded Ukraine, we may see global economic growth slow to a crawl in the coming year as the prices of commodities and other basic goods climbs in response to stronger demand and supply constraints,” McCormack said.
AUTHOR
Oksana Patron
Recommended for you
The alternative investment manager has signalled its intentions to repackage an existing fund into a second private equity vehicle, targeting both listed and unlisted opportunities.
The acquisition of Mason Stevens by Adamantem Capital has reached completion, as the wealth platform looks to increase investment into its services for Australian wealth practices.
Platinum Asset Management and VanEck have both announced name changes to multiple of their ETFs to clarify their complexity.
Active ETFs are gaining traction in Asia-Pacific as wealth managers seek to blend the low-cost fees of passive with active management.
