Financial Daily from THE HINDU group of publications
Thursday, May 25, 2006
Financial Daily from THE HINDU group of publications Thursday, May 25, 2006 |
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Agri-Biz & Commodities
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Interview `Bullish commodity market story not changed'
Mr Michael Coleman of Aisling Analytics feels that the fundamental driver of the bullish commodity market story has been global demand growth and GDP growth particularly in Asia, which has not changed even now. He adds that as a theme, people are long on emerging markets, commodities, emerging market currency, whereas short on the dollar. Mr Coleman also says although they don't trade base metals, he would be on the sidelines in copper. Excerpts from CNBC-TV18's exclusive interview with Mr Michael Coleman From a hedge fund perspective how does Tuesday's bounce back in copper, aluminium and zinc look to you. Is it just a dead cat bounce or do you think things are turning? We are inclined to think that it was a buy on dip opportunity because the fundamental driver of the bullish commodity market story has been robust with global demand growth and GDP growth particularly in Asia. As of now, there are no signs of that being challenged yet, and just yesterday we saw very strong numbers. We think that the sell off was a bit too steep, where the prices could go on to make new highs. Particularly in the base metal market, some significant froth is still left. But in this pull back, don't you expect to see a lot of funds selling out because the sense was that during that cut, a lot of funds got caught at the wrong end? In a way it was a classic spiral downwards. There are some macro factors, which have made the markets more vulnerable to events. As a theme, people are long on emerging markets, commodities, emerging market currency and short on the dollar. As things begin to turn down as it happened last week, then we see a lot of people looking to book profits. Do you think base metals have bottomed out, could there be more pain left there? In the context of what they have done in the last three months, copper falling from $8500 to $7500 cannot be anything other than a correction. The year began with the copper price at $4000 a tonne, so the copper prices have doubled in three months and that is not a usual behaviour even in the most raging bullish commodity markets. But at this time in the short term, if you saw a dip in copper would you buy into it? We don't trade base metals. But, I would be on the sidelines in copper.
More Stories on : Interview | Commodity Exchanges
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