'Good time to invest in energy, metal sectors'

Right now, commodities are cheap and there's constraint on supply, says Rupert Rucker of Schroders Plc's head of product for Asia

It is a good time to invest in energy and metal sectors now, said Rupert Rucker of Schroders Plc's head of product for Asia.

"Right now, commodities are cheap and there's constraint on supply. By putting money in commodities, you'll hedge against inflation," he told Business Times in an interview in Kuala Lumpur.

"We're still in a commodities' supercycle. Global demand for oil, coal, gas and copper is on the rise as we see signs of recovery in the global economy," said the fund manager.

Rucker, who is based in Tokyo, recently flew in to Kuala Lumpur to give a briefing on the 2010 outlook on global markets and commodities.
"We take a bottom up view when sizing up the potentials of commodity-based companies. Those that offer bigger investment opportunities tend to be in Brazil, Russia, India and China," Rucker said.

As early as five years ago, Rucker had already likened the BRIC phenomenon to the emergence of the US as an economic power in the 19th century and Japan's explosive growth in the 1960s. He still thinks so today.

These four countries have huge populations - India and China number close to 2.5 billion people between them - and, as more of them get a share in the growing wealth of their countries, their spending will fuel further economic growth.

Rucker explained that while their performance will obviously be affected by commodity price fluctuations or global economic circumstances, these emerging economic grouping are not wholly-dependent on traditional economic cycles.

Rucker presented three scenarios that influences his crude oil forecast.

"Should the global economy experience a 'V-shaped' recovery, we can expect oil price to surpass US$100 (RM342) per barrel. If it is going to be a double-dip or a 'W-shaped' recovery, then oil price could well trade in the region of US$80 (RM273) per barrel," he said.

"There's also another situation where the global economy could go into a stagflation where we see oil trade at a higher bandwidth of US$90 (RM307) per barrel while world growth stumbles along at 1 per cent," he added.

Rucker was representing Schroders, which is helping to manage some RM550 million for the CIMB Group. Also present at the session were CIMB-Principal Asset Management Bhd chief executive officer Campbell Tupling and CIMB Wealth Advisors Bhd chief executive officer Tan Beng Wah.

At the end of 2009, CIMB-Principal managed a total of RM23.4 billion of investors' money, of which almost half are unit trusts.