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SOURCE Credit Suisse AG
NEW YORK, June 10, 2014 /PRNewswire/ -- Commodities were lower in May as some immediate supply concerns eased.
Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management business, said, "While commodities declined in May as some of the supply concerns that impacted key commodities in the first quarter subsided, we believe that the potential for production risks continue to exist. Weather may continue to play a key role driving commodity returns in 2014, particularly in Energy and Agriculture, should extreme patterns continue. For example, the fundamentals for natural gas are stronger than they have been in the last five years following an extraordinarily cold winter for much of the US, leading to robust heating demand and causing supply and transportation hurdles. To reach normal US inventory levels ahead of next winter would require the largest ever storage injection over a six-month period. At the same time, a hot summer could potentially increase power generation due to cooling demand."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "The US economy contracted for the first time in three years in the first quarter as it buckled under a severe winter, but there are signs it has rebounded and is on track to recover solidly from the setback in the first quarter. Recent data shows a rebound in residential construction, and leading indicators continue to signal a pick-up in corporate investment. The Federal Reserve will likely continue to reduce its monthly asset purchases and wind down its quantitative easing program, but risks continue to be skewed to US economic growth coming in stronger than anticipated going forward. Correlations between commodities and traditional asset classes have stayed low as conditions have normalized. We continue to expect commodities to provide valuable diversification benefits going forward."
The Dow Jones-UBS Commodity Index Total Return declined 2.87% in May. Overall, 13 out of 22 index constituents posted negative returns. Agriculture was the worst performing sector, down 7.18%. In addition to Coffee and Wheat, Corn also declined due to expectations of increased South American exports and higher 2014 ending stocks in China. Precious Metals decreased 3.55% as positive sentiment led to record-high US equity valuations, declining volatility across markets, and a further reduction in the safe-haven appeal of gold. Lower physical gold demand out of India and China also weighed on the sector. Livestock ended the month 2.03% lower after the World Organisation for Animal Health stated impacts from the PED virus may ease as the US hog population develops immunity to the disease. Energy declined 0.66%, led lower by Natural Gas. Energy Information Administration storage data revealed a narrowing supply deficit compared to the five year average. Industrial Metals was the best performing sector, up 2.71%, with all sector components posting positive returns.
About the Credit Suisse Total Commodity Return Strategy
Credit Suisse's Total Commodity Return Strategy has been managed for over 19 years and seeks to outperform the return of a commodities index, such as the Dow Jones–UBS Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:
As of May 31, 2014, the Team managed approximately USD 11.5 billion in assets globally.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,000 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
In its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.
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Important Legal Information
This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change without obligation to update. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.
Certain risks relating to investing in Commodities and Commodity-Linked Investments:
Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative's original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.
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