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Why PineBridge’s multi-asset team bets on copper

Why PineBridge’s multi-asset team bets on copper

The divergence of the global economy this year is creating investment opportunities in copper, according to PineBridge Investments’ Sunny Ng.

The Hong Kong-based portfolio manager said the difference between the physical supply and demand, as well as the dynamics of existing financial markets is creating opportunities for copper.

'Right now, one idea we have in our portfolio recently is copper,’ he said at press briefing in Singapore. 

The market has seen a pretty significant sell-off in copper, which creates physical space for the asset class. Meanwhile, warehouse inventories will probably draw down to zero by end of this year.

Ng said copper is also likely to be the first beneficiary of the Chinese government’s efforts to stimulate the economy. China is the world’s largest consumer of copper, and consumes about 50% share of global copper consumption.

‘When there’s some divergence, that actually creates some opportunities as well, especially for active managers in terms of selection the right asset classes at the right time,’ he added.

As China is coming off a few problems, Ng said it is a bit early to buy China A-shares now.

For one, China has been deleveraging all year. Even if they re-stimulate now, it takes between six and eight months before the effect kicks into real economy.

In addition, Ng said he also does not expect to see a turnaround in China’s economic growth numbers for the next few months. ‘It will get a bit worse before it gets better.’

Going forward, he added that there will most likely be some kind of convergence going into next year.

Convergence can be the rest of the world growth towards the US, or US growth towards the rest of the world. The other convergence will be tech versus the other industries where you see massive divergence this year.

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