Investors almost doubled purchases of commodities this year, at a time when Goldman Sachs and Morgan Stanley are forecasting higher prices and Citigroup says the best returns are over.
Money invested in commodity funds increased by US$21.6 billion this year, up 92 per cent from the gain in 2011, according to Massachusetts-based EPFR Global, which tracks the flows. Hedge funds' bets on a rally are 51 per cent bigger than a year ago, US government data shows.
While commodities are headed for their first annual retreat since 2008, growth in emerging markets will boost demand and tighten supply, Goldman Sachs' analysts said in a report this month.
The Standard & Poor's GSCI gauge of 24 raw materials almost tripled in the past decade as producers failed to keep up with consumption.
That "super cycle" of returns has now ended because China is growing more slowly and supply has caught up, Citigroup's analysts said in a report last month.
"It comes back to the uncertainty about the economy, and the government policies that are going to be enacted or potentially changing over the next year," said Peter Jankovskis, the co-chief investment officer at Illinois-based Oakbrook Investments.
"That's why you're seeing that disparity in the outlooks of many of these forecasting firms."
The S&P GSCI fell 0.9 per cent this year, the worst performance since a 43 per cent drop in 2008, with the biggest declines in coffee, cotton, sugar and crude oil. The MSCI All-Country World Index of equities advanced 13 per cent and the Dollar Index, a measure against six major trading partners, dropped 0.9 per cent.
The declines in crude and gasoline are driving the S&P GSCI lower because energy accounts for about 70 per cent of the gauge by weight.
Eighteen members of the index advanced this year, led by gains of 23 per cent or more in wheat and soybeans as US farmers endured the worst drought in a half century. Gold is headed for a 12th consecutive annual increase, driven by central bank stimulus.
"Commodities tend to be victims of their own success," said Jack Ablin, the chief investment officer of BMO Private Bank in Chicago. "If you think about industrial metals, we have now dug a little deeper, and mined a little more, and now we have unprecedented inventories."
* Bloomberg News
SPECS
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
MATCH INFO
Chelsea 1
Alonso (62')
Huddersfield Town 1
Depoitre (50')
COMPANY%20PROFILE%20
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COMPANY%20PROFILE
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The biog
Age: 46
Number of Children: Four
Hobby: Reading history books
Loves: Sports
Biog
Mr Kandhari is legally authorised to conduct marriages in the gurdwara
He has officiated weddings of Sikhs and people of different faiths from Malaysia, Sri Lanka, Russia, the US and Canada
Father of two sons, grandfather of six
Plays golf once a week
Enjoys trying new holiday destinations with his wife and family
Walks for an hour every morning
Completed a Bachelor of Commerce degree in Loyola College, Chennai, India
2019 is a milestone because he completes 50 years in business
THE DETAILS
Deadpool 2
Dir: David Leitch
Starring: Ryan Reynolds, Josh Brolin, Justin Dennison, Zazie Beetz
Four stars
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
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On sale: Now
Blackpink World Tour [Born Pink] In Cinemas
Starring: Rose, Jisoo, Jennie, Lisa
Directors: Min Geun, Oh Yoon-Dong
Rating: 3/5
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Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
US tops drug cost charts
The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.
Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.
In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.
Some of the costliest drugs worldwide include Lipitor for high cholesterol.
The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.
High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.
TRAP
Starring: Josh Hartnett, Saleka Shyamalan, Ariel Donaghue
Director: M Night Shyamalan
Rating: 3/5
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