Cut commodities exposure, says BNP Paribas Investment Partners
Joost van Leenders (pictured), BNP Paribas Investment Partners’ investment specialist, says his unit’s commodities exposure has been cut to neutral amid fears that weaker global growth renders the asset less attractive.
“Although equity markets can easily rebound on positive eurozone news (or even rumours), we don’t foresee a sustainable rally any time soon.”
“We reduced the exposure to commodities to neutral from overweight on the view that the outlook for weaker global growth makes commodities less attractive,” he said.
Leenders believes global growth will continue to stall due to the US economy struggling with slow consumer spending and falling real disposable income.
“Large companies may be benefiting from global growth, but the increase in exports may not last since the eurozone is teetering on the brink of recession, growth in emerging markets is moderating and the US dollar has gained against many other currencies,” Leenders added.
Leenders said big drops in the purchasing managers’ index (PMI), often used as an economic indicator, in India, Poland, Singapore, Mexico and South Korea, demonstrate a wider growth slowdown in the emerging markets.
“Overall, for us it looks as if equity markets are still quite weak and continue to be dominated by news on the eurozone sovereign debt crisis and its impact on the banking sector,” he concluded.