Baring Asset Management says core resource stocks, such as gold and oil, are likely to become a regu...
Baring Asset Management says core resource stocks, such as gold and oil, are likely to become a regular attraction to investors in 2003 as the continued volatility could keep assets in selling commodities.
John Payne and Michael Sell, fund managers or the Baring Global Resources Fund registered in Dublin, say they expect emerging markets resource companies, in particular, to offer good returns because demand still outweighs supply in some cases, while other companies are fast learning to cut their production costs.
"This is particularly relevant to the Russian oil companies which are increasingly utilizing Western technology to enhance productivity driving the costs down and production up," says Payne.
"Furthermore, Emerging market companies are benefiting from stronger growth prospects than developed political and economic uncertainty, especially in the Middle East, and instability in the global financial markets, gold has reasserted itself as a more attractive investment," he adds.
Sell says one of the key attractions within resources investment funds is gold equities, particularly unhedged gold producers, who can meet the huge demand for gold products and benefit from US dollar weakness.
"Other stocks we also like in the resources sector are IOI Corporation and Tate & Lyle," says Sell.
"IOI Corporation is a Malaysian palm oil producer, benefiting from rising oil prices. Tate & Lyle has successfully restructured its operations recently, and is enjoying increasing pricing power in the US. The stock is inexpensively valued and also offers an attractive dividend yield," he continues.
The Baring Global Resources Fund has gained 2.6% in the year to August 31st, while the MCSI World Index has fallen 16.3% in that time.
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