Credit Suisse's fund management arm is bullish on commodity-rich nations, which it expects to have growing economic muscle as hunger for raw materials intensifies, a senior investment strategist said.
Countries such as Russia, already a major exporter of oil and gas, are likely to rise up the economic pecking order compared with nations relying more on technology and business flair, Philipp Vorndran, investment strategist and a managing director, told Reuters in a telephone interview. "You have to think about the fact that the price of raw materials versus know-how have moved up quite dramatically in real terms."
Russia's energy clout came under the spotlight when oil firm Rosneft said its IPO raised $10.4 billion on Friday, the eve of the G8 summit in Russia this weekend, valuing the company at $80 billion.
Vorndran said Credit Suisse is bullish on commodities - a stance it has adopted for more than 4 years - and also underweight bonds because it fears rising inflationary pressures could hit bond yields, particularly in long-dated maturities.
The strength of metals, precious metals, energy supplies and soft goods like grains explains why Credit Suisse is overweight many emerging markets, he said.
"We have very high confidence that commodities will move higher, not just because of geo-political risk but on the difficult supply-demand situation that we face right now and certainly for the next five years."
Oil prices have continued to push higher this year, taking a further hike on Friday as investors fretted about escalating violence between Israel and Lebanese armed group Hizbollah. The price of Brent and US crude oil futures surged to a record high above $78 a barrel on Friday. IPE front-month Brent hit a record $78.03. Among other commodities, prices of metals such as nickel - vital for items like stainless steel - have hit record highs.