Why Investors Have a Renewed Interest in Emerging Markets
Oil prices have recently stabilized, helping to boost commodity prices to their highest levels since December 2015, along with prospects for countries reliant on commodity exports. Commodity exporters, such as Russia, South Africa, Mexico, Chile and Malaysia could be worth exploring as a result.
Market Realist – Commodity prices inching upwards
After a sharp drop in 2015, commodity prices have been inching upwards in the past month. The Bloomberg Commodity Index, which represents 20 commodities (GSG) (COMT), is up by 8.7% over its lowest point reported in January 2016.
US oil futures are up nearly 50.3% from their 13-year low of $26.21 reported on February 11 and are currently trading at around $39.39 a barrel. Likewise, copper on the London Metal Exchange is up 15% to $4,944 a ton from its six-year low reported in January. Iron ore prices have also risen by nearly 30% this year to more than $50 a ton.
The turnaround in commodity prices has helped major commodity exporters. The year-to-date metal and mining indexes for Australia and Indonesia are up by 6% and 10%, respectively. Similarly, Russia (ERUS), which relies on oil and natural gas (IEZ) for almost half its fiscal revenue, could see a reversal in fortunes with the steady rise in oil prices. In the same way, oil exporters such as Malaysia and Mexico could benefit with the rise in oil prices while Chile, which is one of the top copper exporting countries, could benefit with the rise in copper prices. Chile IPSA is already up by 7% this year.
South Africa’s (EZA) exports predominately consist of commodities including chrome, manganese, scrap metal, and copper. The steady rise in commodity prices is expected to boost the South African economy. The rise in commodity prices has helped South Africa’s JSE all-share index to gain around 12% this year over its January low.
Browse this series on Market Realist: