Commodities. It isn’t stopped. Brent oil north of 80, coal skyrocketing, nat gas skyrocketing etc etc…

China just said told its government officials “GET ALL THE COMMODITIES YOU CAN”…I thought that this is was a group that was supposedly clever and long term in their strategic thinking…

Whilst we’re grinning from ear to ear in the office seeing our commodity related names in the region go through the roof (except PTTEP – what’s going on with this donkey kong? Thai Fund Managers, wake up!). We start to ponder, what impact will this have on businesses, actually – we know that it is going to be rubbish for businesses and consumers…at what point do we begin to see things break (further)?

There is one caveat – the issue with owning equity names in the commodity space, especially SOEs is that we may see price capping – thereby hindering the profit potential (leading to losses at times) and thereby capping upside. It’s the key reason why I wouldn’t go ballistic in these names…




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