COVER STORY
Commodities
Performance of index since 2020 bottom
Bloomberg Brent Crude ( 169.2 %)
200 % |
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175 % |
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150 % |
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125 % |
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100 % |
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75 % |
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50 % |
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25 % |
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0 % |
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-25 % |
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May20 |
Jul |
Sep |
Nov |
Jan21 |
Mar |
May |
Jul |
Source : FE Analytics
capital discipline ,” she says . “ Despite the sector ’ s recent outperformance , it continues to trade on a relative valuation discount versus historical levels . Copper and iron ore prices have recently hit all-time highs and margins for companies are currently exceptionally strong .” In this context , Lequime says miners do not even have to see an increase in the value of the underlying commodities to do well . He adds that with the market where it is , the commodities sector could add some diversification to a general equity portfolio .
“ I don ’ t know when that trigger point is going to be , but we ’ re seeing all these stats about earnings , and the levels of the broader stock market are quite extreme right now ,” he says . “ Expectations are very high . Once we get a pullback in the market , investors are going to look and say , ‘ where can I find value ?’”
Tailwinds While Lequime says commodities don ’ t even need further tailwinds to do well , it looks like these are on the way .
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