commodities, has benefited from the rally in metals, bulks and agricultural prices. Accordingly, global investors are chasing strong returns from the booming materials sector of the Pacific nation, piling into Australian-listed commodity stocks at the fastest pace in years, according to UBS. “The net buying of commodity stocks by international investors has been at one of the highest levels that we’ve seen in a long time,” Clinton Wong, co-head of equities at UBS Australia, said. “Australia has a very large commodity exposure through energy, bulks, base metals and chemical metals, and it’s a market that global funds like and understand – it’s a stable and deep market.”
This influx of investors into the commodity sector has been identified as a part of a wider defensive shift, by UBS, which facilitates the most trades of any broker in the Pacific nation. “We’ve seen investors tilt very much towards cyclical stocks, and not just commodities, but also industrial cyclicals,” Wong said. “When you’ve got expectations of rising interest rates, there’s more interest in companies that are valued on a discounted cash flow basis, such as the defensive infrastructure stocks, while those extraordinarily high growth tech stocks are obviously less in favour.”
While dips in trading volumes have been observed by UBS when global uncertainties spiked this year, Wong said that overall, 2022 is on par with previous years. On Wall Street, Morgan Stanley, Goldman Sachs and Citigroup all smashed expectations for bond-trading and stock revenue for the first quarter of this year in their earnings reports on Thursday (14 April).
