You are here: Home - Saving & Banking - News -

HSBC anticipates soft commodities correction

0
Written by:
14/03/2008

HSBC Investments – an early bull in the soft commodities rally – has turned short-term bear in anticipation that the asset class will cool further in coming months.

Charlie Morris, manager of HSBC Investments’ Absolute Return Service, a managed portfolio service with $2.5bn assets under management, has sold all remaining exposure to soft commodities, including grains, coffee, sugar and cotton. Morris has used the proceeds from this trade to increase exposure to industrial metals.

Morris said: “While the longer term-supply and demand imbalance remains a key driver for agricultural commodities, the recent price movements have been overwhelmed by extreme levels of financial speculation. Although the long-term strength may well continue, the sector needs to cool before this is likely to happen and some further price consolidation over coming months is now likely.”

The portfolio now holds zero exposure to soft commodities, down from its peak of 8% in January 2008, held via an exchange traded fund. Overall commodity exposure in the portfolio is also down to 5.7%, from its peak of 15% in January 2008.

Morris said commodity prices were clearly over extended in most areas. Over the past nine years, an equally weighted commodity basket (as defined by the Continuous Commodity Index ) has risen 209%, similar to the 235% rise over a nine-year period in the 1970s (1971 to 1980), another period of dollar weakness.

Within HSBC Investments’ Absolute Return Service, soft commodity exposure has been replaced with a small holding in industrial metals, also via an ETF. This basket comprises 38% aluminium, 32% copper, 15% zinc and 15% nickel.

 

Related Posts

Tagged:

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Are you married or in a relationship and still living at home with your parents? According to latest research as ma… https://t.co/SpiNzsKIi6
  • RT @TSB_News: Today we’ve launched market leading rates on the high street with our two-year fixed bond and two-year fixed rate cash ISA. R…
  • RT @TSB_News: Today we’ve launched market leading rates on the high street with our two-year fixed bond and two-year fixed rate cash ISA. R…

Read previous post:
Three in five Brits have money rows

More than 71% of Brits borrow money from family members or friends, according to a poll of UK credit professionals...

Close