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Commodity prices took a tumble in April, with the Scotiabank Commodity Price Index falling 6.2% on a month-over-month basis. That marks a decline of 45.4% from the cyclical peak reached in July 2008.
The index tracks the price fluctuations of 32 major export commodities produced in Canada.
“The All Items Index is now at or close to bottom, with a number of key commodities, uranium, propane and NBSK pulp, probably touching cyclical lows in April,” says Patricia Mohr, vice-president, economics and commodity market specialist at Scotiabank.
Mohr points out that some commodities, notably uranium, have since rallied. Further declines could materialize in late summer, as demand from China tapers off, but she predicts further upside in autumn.
“While uncovered utility requirements over the next twelve months are low, Asian utilities, a major investment fund and the world’s largest uranium miner (Cameco) have been active buyers, anticipating higher prices to come,” says Mohr. “While recent weakness in the spot market pulled down the base price for long-term contracts, prior to escalation on delivery, to US$65 from US$70 in mid-April, we expect a rebound by 2010.”
Investment managers are expected to move back into commodities ahead of an anticipated economic recovery, as the world “reflates” over the next three years. That recovery will be fuelled by China and other rapidly growing Asian economies. At the same time, investors are becoming less trusting of fiat currency, and are expected to opt for hard assets as a hedge against inflation.
The Scotia metal and mineral index was down 11.3% in April, which dragged the overall index lower. But there were some glimmers of hope within that sector, as copper rallied from $1.70 U.S. per pound to $2.16 U.S., on increasing demand from China.
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HSBC replaces three sub-advisors
HSBC Asset Management (Canada) has recruited new sub-advisors for three of its funds.
As of April 29, Edinburgh-based Martin Currie Inc. has replaced Pictet Asset Management as the sub-advisor for the HSBC MM International Growth Equity Pooled Fund.
Lotsoff Capital Management has been replaced by the Seattle-based Rainier Investment Management as sub-advisor for the HSBC U.S. Equity Fund. This took effect on May 13.
Toronto-based Scheer, Rowlett & Associates has been named sub-advisor to the HSBC MM Canadian Value Equity Pooled Fund, replacing AllianceBernstein, which went into effect on May 15.
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BetaPro launches education resources, gold fund
BetaPro Management, the manager of the Horizons BetaPro exchange traded funds (ETFs), announced the launch of the Horizons ETF University for Investment Advisors.
The full day sessions are designed to provide in-depth education about ETFs and to show how the product fits into various investment strategies. Also, pending final approval, the course may qualify as a continuing education credit.
The instructors for the courses will be Howard Atkinson, president of BetaPro, an ETF expert from a Canadian bank and several university professors with expertise in finance, economics and capital markets.
A full agenda is available on the BetaPro website.
BetaPro also announced today, May 20, the filing of a preliminary prospectus for the Horizons BetaPro Double Gold Bullion Fund, which aims to provide liquid, secure and low-cost leveraged long-term exposure to physical gold bullion.
The fund can be purchased in U.S. dollars (Class U), or Canadian dollars (Class C). Since bullion is priced in U.S. dollars, the fund will hedge substantially all of the U.S. dollar currency value of the assets of the Class C units back to the Canadian dollar.
(05/20/09)
