Hedge funds bet on bright future for metals – by Maiya Keidan, Pratima Desai and Barbara Lewis (Reuters U.K. – September 19, 2017)


LONDON (Reuters) – Hedge fund investment in the metals industry is at its highest since 2011, according to investment data, a sign that investors are hoping to profit from a rise in prices that have spent years in the doldrums.

The investment by hedge funds follows a broader inflow of money into industrial metals, where prices are rising after production cutbacks helped to reduce a supply glut. That oversupply crisis led to the closure of some specialist metals hedge funds, including those run by Apollo Global Management and Hall Commodities.

The metals industry’s fortunes are turning, as an environmental crackdown in China, the world’s second-largest economy and biggest consumer and producer of industrial metals, in polluting industries cuts supplies.

The upturn creates opportunities for speculative investors, betting that the strong run continues – or positioning themselves for a tumble in prices.

Data from S&P Intelligence showed hedge fund investments in metals and mining stocks reached $18.52 billion (13.65 billion pounds) on Sept. 5. This compares with a peak of $28.98 billion in 2010 and a low of $10.16 billion in 2015.

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