Powered by momentummedia
nestegg logo
Powered by momentummedia
nestegg logo
nestegg logo

Invest

Investors warned on commodities surge

By Katarina Taurian · May 11 2016
Reading:
egg
egg
egg

Invest

Investors warned on commodities surge

By Katarina Taurian
May 11 2016
Reading:
egg
egg
egg
investors warned commodities surge

Investors warned on commodities surge

author image
By Katarina Taurian · May 11 2016
Reading:
egg
egg
egg
investors warned commodities surge

The recent spike in commodities trading is sending shock waves through global commodity markets and could also have significant ramifications for the Australian economy, one Aussie fund manager has warned.

Instreet managing director George Lucas said retail investors, high-net-worth individuals, wealth managers and Chinese investors have all piled into commodities futures over the past couple of months.

“Adding fuel to the fire was the decision by Chinese regulators to clamp down on equity markets,” said Mr Lucas.

“In response, Chinese investors have diverted their money into commodity futures – not property assets as many may have expected.”

Mr Lucas said all of this has significant consequences for Australia, given that the Australian currency, economy and stock market are influenced by the price of iron ore.

Advertisement
Advertisement

“Having the price of iron linked to Chinese retail investors is not ideal to say the least,” he said.

“This madness has surprised western investors and rattled global commodity markets, causing a sharp run-up in the price of steel and iron ore futures.”

At the start of this week, Mr Lucas said, the number of steep reinforcement bar contracts traded in Shanghai exceeded the volume produced by China annually.

“In an attempt to cool the market and reduce the high volumes, the Chinese regulator increased transactions fees and margin requirements on Chinese commodity futures,” he said.

“This led to the large fall in iron ore prices we experienced last week.”

Investors warned on commodities surge
nestegg logo

Forward this article to a friend. Follow us on Linkedin. Join us on Facebook. Find us on Twitter for the latest updates
Rate the article

Join the nestegg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

From the web

Recommended by Spike Native Network

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.