NEW YORK, Nov. 9, 2011 /PRNewswire/ -- Commodities were broadly higher in October as macro-economic sentiment recovered for the month, which concluded with an EU summit agreement to require greater bank capital requirements and to increase the size of the region's rescue fund.
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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management division, said, "The agreement reached by the EU summit temporarily improved investor sentiment which lent support to multiple asset classes, including commodities. While markets are likely to remain volatile as the details of the European deal are released and agreed upon by various members, short-term demand may be stimulated with most commodities trading at lower prices after the recent sell off. However, long-term fundamentals remain constructive for many key commodities."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "Commodities posted strong gains for October, but the complex appears to have priced in less optimistic economic forecasts than equity markets. The uncertainty surrounding the European resolution and the possibility of recession can impact traditional asset classes and commodities differently. In the long term, we believe commodities will continue to offer value for investors despite risk aversion and potential volatility across capital and commodity markets."
The Dow Jones-UBS Commodity Index Total Return was up by 6.62% in October. Overall, 15 out of 19 index constituents increased in value. Industrial Metals was the best performing sector, up 9.32% for the month, on reports that consumer base metal inventories are at minimal levels and physical demand increased. Energy ended the month up 8.79%, led by Crude Oil. Crude inventories in the US and Europe continue to tighten, putting pressure on the near term supply/demand balance. Precious Metals gained 8.04% as investor interest stabilized and strong physical demand out of Asia helped boost the sector. Agriculture ended the month up 3.85%, led by Corn which was supported by weekly USDA sales data reflecting strong export demand. The release of China's September trade data featured continued net imports of Cotton, Sugar, Wheat and Corn. Livestock lost 2.24% and continues to have low correlation to the rest of the commodity complex and other asset classes.
The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team's white paper, "Commodities Outlook: Increased Volatility, Increase Opportunity?", please email [email protected].
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for 17 years and seeks to outperform the return of a commodities index, such as the Dow Jones–UBS Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:
- Spot Return: price return on specified commodity futures contracts;
- Roll Yield: impact due to migration of futures positions from near to far contracts; and
- Collateral Yield: return earned on collateral for the futures.
As of October 31, 2011 the team managed approximately USD 11.1 billion in assets globally.
An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy. Investment in commodity markets may not be suitable for all investors. Commodity markets are highly volatile and the risk of loss in commodities and commodity-linked investments can be substantial.
Credit Suisse AG
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In its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.
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Important Legal Information
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change without obligation to update. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.
Certain risks relating to investing in Commodities and Commodity-Linked Investments: Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative's original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.
Copyright © 2011, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
SOURCE Credit Suisse AG
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