Industry Updates

Barings: Russian Commodities key in China’s bid for global supremacy

Wednesday, July 01, 2009

Tweet
Print
Email
Track Keywords

Opalesque Industry Updates – Matthias Siller, fund manager of Baring Emerging Europe Plc at Baring Asset Management (Barings), suggests Russia’s huge commodities reserves mean it is best placed to supply the raw materials China needs in its bid to become a leading global economic power.

Matthias explains, “Governments around the world, China included, have launched massive economic stimulus packages in a mass attempt to avoid a depression. A significant proportion of these packages are allocated for infrastructure spending and this is particularly the case in China. Due to its high commodity reserves, we believe that Russia is going to play a critical role in China’s rapid industrialisation and urbanisation. Oil and gas aside, it is little known that Russia has approximately 40% of the global reserves of palladium, 28% of titanium, 17% of nickel and 8% of iron ore *.”

Siller continues, “Russia is currently the best performing equity market with the MSCI Russia 10-40 Index rising by 38.9% compared to 14.4% for the MSCI Emerging Europe 10-40 Index**. We believe the region presents significant investment opportunities for medium to long-term investors. The fact that we currently have just over half of the trust (56.4%) invested in Russian securities is a clear indication of our confidence in the region.”

As well as hard commodities, according to Barings, Russia is one of the world’s major suppliers of soft commodities, such as wheat and grain. This is a further source of investment potential as the global population expands and demand outstrips supply.

Baring Emerging Europe Plc was launched in 2002 with the aim of achieving long-term capital growth, principally through investment in Emerging European securities. Baring Emerging Europe Plc has returned 16.9% since inception while the MSCI Emerging Europe 10/40 Index has returned 6.5% over the same period***.

* Approximate figures. Source: Baring Asset Management Share of global production, USGC, UBS estimates and company data as at 10 January 2008
** Based on the time period 01.01.09 to 30.04.09
*** All performance source: Baring Asset Management as to 31 May 2009, NAV per share basis

Baring Asset Management is an international investment management firm with investment skills, clients and business locations spanning world markets. Our investment competency encompasses developed and emerging market equity, fixed income and multi-asset portfolio management services offered to institutions, retail investors and private individuals. Worldwide clients include public and corporate pension plans, government agencies, financial institutions, charitable organisations, mutual funds and private individuals. www.barings.com.

Article link