investors plan to overweight commodities: Credit Suisse
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[June 27, 2014]
By Barani Krishnan
(Reuters) - More investors
plan to ramp up on commodities over the next 12 months
after years of pessimism toward the sector, betting that
the Iraq conflict will push oil prices higher while
other commodities prices advance in volatile trade, a
Credit Suisse poll showed on Thursday.
The Swiss bank said it found a favorable view developing toward
commodities at a conference in New York this week, when it surveyed
350 investors, including institutions, hedge funds, family offices,
mutual funds and corporate firms.
A year ago, the bank said most investors at a similar Credit Suisse
conference expressed reservations on commodities.
"The majority of attendees continue to be underweight or neutral
commodities," the bank said in its latest poll.
"However, when asked 'What do you expect your level of investment to
be over the coming 12 months?', 42 percent of respondents said
'overweight,'" Credit Suisse said, up sharply from the 19 percent
who expressed such optimism in 2013.
Commodities have had a mixed year, with oil and gold prices moving
higher lately after being rangebound for months.
The 19-commodity Thomson Reuters/Core Commodity CRB Index <.TRJCRBTR>
is up 11 percent on the year, after strong first-quarter gains in
energy prices. The U.S. The S&P500 index <.SPX> for U.S. stocks is
up just 6 percent.
Credit Suisse said 30 percent of the investors it surveyed expected
benchmark Brent crude oil to trade at $120 a barrel and above over
the next year, marking a high since April 2012.
On Thursday, Brent settled down 0.7 percent at $113.21 a barrel. A
week ago, it hit a nine-month high of $115.71 on fears that fighting
in Iraq could split the country and hurt oil exports.
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"Most attendees appeared to view the current crude price risks as
skewed to the upside", Credit Suisse said, adding they also noted
"how thin spare capacity has become in the system and the danger of
further supply disruptions in Iraq or elsewhere".
The investors were also of the view that commodities were becoming
appealing again to those wanting a balanced portfolio as
correlations between raw materials prices and equities had broken
down, making diversification integral.
There was also "strong consensus that commodity volatility was
likely to be higher" and that "fundamentals have come back to the
fore" to drive prices higher, it said.
(Reporting By Barani Krishnan; Editing by David Gregorio)
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