Investec's Bradley George explains the threat of rising oil prices on the commodities sector.
Given concerns in Japan, conflict in the Middle East and the potential impact on oil supply and therefore oil prices, there has been rotation out of the more leveraged mining sector into the more defensive energy sector. With high oil prices threatening to limit global economic growth and the Chinese credit tightening to limit inflation, there is also uncertainty around base metal and bulk material demand. This has led to the materials sector continuing to underperform and, while valuations are now looking more attractive, there is still caution. However, if Chinese inflation peaks la...
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