Newspaper article The Evening Standard (London, England)

Goldman Backing for Bric Economies and Commodities; MARKET ROUND-UP

Newspaper article The Evening Standard (London, England)

Goldman Backing for Bric Economies and Commodities; MARKET ROUND-UP

Article excerpt

Byline: Rosamund Urwin

COMMODITY stocks should keep rising next year, but the best is behind the financials.

That's the opinion of Goldman Sachs, whose strategy suggestions for 2010 were being circulated in the City today.

The City heavyweight has downgraded the banking sector to neutral after its recent strong performance, although it continues to favour the large global retail banks.

Goldman's boffins are less keen on the insurers, downgrading the entire sector to underweight, warning that they face structural problems and will be constrained by low rates.

But it is advising clients to snap up oil and gas, basic resources and industrial goods stocks, believing that both commodities and exposure to the BRIC economies (Brazil, Russia, India and China) should provide sustainable growth.

Goldman's strategists say that we have now moved beyond the "hope" phase of the equities rally, where shares soar despite falling company profits and the economy remaining stuck in recession, as investors turn their thoughts to better times ahead. They reckon we are now entering the "growth" phase of the cycle where the performance of shares is driven by the sustainability of earnings growth.

Shares in London rose, with the FTSE putting on 30.71 points to 5358.10 as the banks bounced back from yesterday's losses. They were helped by Bank of America's announcement that it will repay its $45 billion ([pounds sterling]26.9 billion) loan from the US government. Lloyds Banking Group surged 2p to 55p, Barclays was 9p stronger at 3061/2p and Royal Bank of Scotland added 1/2p to 34p.

The heavyweight miners were also in demand after gold hit a record high and thanks to Goldman's fondness for the stocks. Vedanta Resources climbed 48p to 2493 and BHP Billiton, the world's biggest listed miner, gained 24p to 1966p.

Diamond miner Petra Diamonds gained 31/2p to 631/2p after raising $120 million in a placing with institutional investors. Petra placed 121 million shares at a price of 60p a pop to settle loans, buying out its partner in the Cullinan diamond mine in South Africa and boost the company's balance sheet. …

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