The outlook for resources equities in 2015
While the preconditions of unsustainably low commodity prices and intrinsic value are in place for resources as a whole to rally, the outlook for global resources in 2015 is more akin to ‘the tide is turning’ rather than a king tide that will ‘float all boats’. The combination of an improving, but still sub-trend global growth outlook and lower opportunity cost from overbought income assets will see a multi-speed resources market develop where select commodity industries, companies and assets will perform strongly while others will lag. This variable rate emergence has become evident in our valuation work, which shows a large dispersion in the mispricing of individual resource equities/companies. As a result, share price volatility is still expected to be a key feature for the resources sector in the near term with the outlook favouring active managers; particularly those active managers that are index agnostic and therefore not tied to investing in large companies operating in less favoured industries. Access our full report on Global Resources here: (VIEW LINK)
Pengana Capital Group (ASX: PCG) is an ASX listed diversified funds management group specialising in global and Australian managed funds, with distinct investment strategies that aim to deliver superior risk-adjusted returns to investors.