Speaking at this week’s Bloomberg Hedge Funds Asia Summit in Hong Kong, two leading Asia-based commodities hedge fund managers agreed that supply issues would create higher commodity p
Speaking at this week’s Bloomberg Hedge Funds Asia Summit in Hong Kong, two leading Asia-based commodities hedge fund managers agreed that supply issues would create higher commodity prices over the mid to long-term. Jason Wang, CEO of Singapore-based Iridium Asset Management, whose Iridium Alpha Fund focuses on commodity-oriented equities, said there was definitely a case for commodity prices climbing long-term, but suggested near-term headwinds may exist. “Copper is trading at near-record highs – USD3.85 per lb and that large risk premium over the marginal cost of production discounts any potential supply disruptions in the short-term,” said Wang. “The fact that import arbitrage between LME stockpiles and Shanghai stockpiles has been closed for a large part of the year means you should be wary of a potential pullback in copper prices.” A potential short squeeze on the US dollar could also cause copper prices to fall in the short-term. Panellist Jeremy Gray, Global Head of Equities Commodities Research, Standard Chartered, was bullish on where the markets are going, particularly copper and iron ore. “95 per cent of budgets were cut in 2008, which has left a massive void and it needs to be filled,” said Gray.