Could underweight Materials be the pain trade for CY24?
Kardinia Capital
Investing in long and short Australian equities, with a focus on capital protection.
Base metal commodity prices have been tracking lower for some time and fund manager positioning reflects this. The latest surveys highlight this beautifully, with average positioning across 50 funds underweight 364bp. By historical standards that’s material.
?Source: J.P. Morgan
Iron ore is one commodity bucking the trend rising 18% in CY23 despite a weak Chinese economy (2023 real GDP growth 5.2%). There is potential for China to announce an infrastructure stimulus program at its National People's Congress in March as well as monetary stimulus later in CY24. Could underweight Materials be the pain trade for CY24?
Iron Ore Price Chart
Source: Bloomberg