What 'GlenStrata' heralds for the commodities sector

WHAT 'GLENSTRATA' MERGER MEANS

Investec's George Cheveley believes the proposed Glencore/Xstrata merger could be a catalyst for equities to comverge back to commodity prices.

Though still early days for 2012, the year of the dragon is living up to its moniker so far. Recent positive economic releases have generally been supportive for commodities and resource equities. At the start of the year we noted that 2011 had seen significant divergences occur between commodity producers and their underlying commodities which in some cases had produced a historically wide valuation gap over the course of the year. In our view, signs that the market was starting to look past a credit-shock risk and more towards underlying fundamentals were likely to help correct thes...