Oil prices rising towards the highest since 2015, abundant liquidity, i.e. capital outgoing from traditional sectors towards renewable energies. The horizon presents itself to the eyes as serene or as the eyes of investors. But, as every good driver knows, it is on these occasions that the unexpected is hidden, dangerous for the distracted and superficial.
The classic rule is that commodities and emerging markets preserve trip. That's how it was until a few months ago. The index of emerging markets and that of commodities both rose by 25% between November and January. Then the paths diverged: emerging markets are marking time, while raw materials, both metals and soft commodities, are advancing by around 30 percent.
The arcane has a double explanation:
1) By now the countries of South America represent a minority of the Emerging index while the areas with rapid industrial and technological growth are increasingly present. Tech plus Ict account for 38% of the entire capitalisation.
2) The novelty is represented by China. Normally commodities and Chinese growth go hand in hand. This time China slows down, raw materials don't. The upside driver it is the Biden plan that affects US and Eurozone purchases.
Another anomaly of this bizarre summer regards the trend of the oil assets. Surprisingly, the best deals are being made by the buyers of the reserves or those that may no longer have a market if many countries adapt to the constraints of the Paris treaty for the reduction of CO2 consumption. But Ineos, led by Brian Gilvary, a veteran of BP, is buying up reserves at the selling price, the latest being the Danish company Hess Oil, sold because Copenhagen no longer intends to tolerate polluting emissions after 2030. The phenomenon is destined to grow because Big Oil , which sold $30 billion in assets last year, are planning disposals of at least $140 billion. Meanwhile, the race for renewables is intertwined with the battle within the producing countries. There Emirati rebellion to the quotas set by Saudi Arabia and Russia originates from Abu Dhabi's need to obtain the necessary cash for the strong green investments of the Emirates.
Emerging yes, in short, but with criteria. Thanks to the recovery, managers will divert to markets in this category or so 130 billion dollars to which IMF capital will be added. But watch out for defaults: in the last year Argentina, Ecuador, Liberia, Suriname and Zambia have raised the white flag.
