Nov. 2, 2010
-- Already, between them, China and India account for one third of the world’s population and considering that 1 million people are born in or migrate to the world’s emerging market cities every WEEK, it is said that, in two decades time, the global urban population will increase by some 1.6 billion people, at which point says the UN, it will account for 60% of all people on Earth.
Analysts at “Continental-
Trade” believe that this phenomenon alone is more than enough to justify faith in the sustainability of the bull market in commodities that many Western economists swear is destined to come to an abrupt halt if the fragile economic recoveries in the US and Europe falter further. “It’s drivel”, said one before adding that the same economists said as much about China’s ability to decouple from the West. “We were told that China was so dependent upon its export sector that any recession in the West would almost certainly drag China down with it. How wrong were they? China posted growth in GDP of more than 11% thanks to a $580bn stimulus package and aggressive lending by its state-owned banks that effectively created a domestic market for the goods the country produces”.
There is more than enough evidence to support the “Continental-
Trade” belief that the rising demand and prices for metals and oil due to the robust rising economic activity in emerging markets is built on solid foundations.
Tragic as it sounds, India is still unable to consistently fulfill the most basic needs of its population of 1.2 billion. Nigh on 40 percent of India’s population have no access to electricity and 400,000 children die from diseases linked to their inability to access clean water.
Of all the so-called BRICs nations, Brazil has, perhaps, the widest infrastructure gap. The nation’s declining investment in its infrastructure means that it ranks in the lowest quartile globally for quality of roads, ports and airports. “Not really what one would expect from a country that has control of some of the largest oil deposits in the world”, said the “Continental-
The firm agrees with Merrill Lynch estimates that more than $6 trillion in investment is required over the next three years to bring infrastructure in these countries up to code. For this reason, “Continental-
Trade” analysts maintain their bullishness on the commodities sector and urge investors to ignore the naysayers who are adamant that bonds and over-priced equities are still as safe and profitable as they were before the global financial crisis.
“Commodities such as oil, coal, iron ore, steel and cement will be the big winners in the decade ahead and investors should be looking at companies whose business models are linked to them”, said the “Continental-