With such a grab for global resources in China, we are often asked if there are enough to go around and how prices are affected. These are precisely the questions that Daniel Gross and Aaron Task from Yahoo’s Daily Ticker asked Evan Smith, co-portfolio manager of the Global Resources Fund (PSPFX).
Commodity prices tend to move in tandem with Chinese demand, says Evan. Over the past decade or so, he says the country routinely accounts for a third, a half or as much as 70 percent of all demand for any particular commodity.
When determining China’s future growth, Evan points to many indicators that our investment team reviews: automobile sales, exports from a certain country and the Baltic Dry Freight Index, to name a few. Although China’s rate of growth may slow, Evan says, “From a commodities perspective, you’re at such a large level of demand that the growth rate may go from 10 percent to 5 percent, but the absolute volume in demand each year is actually increasing each year off a larger base.”
Evan also discusses the country’s emergence in global gold consumption and production.
