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Slower China won't hurt commodities, says BlackRock manager
Richard Davis, manager of BlackRock Commodities Income investment trust, says commodity stocks are undervalued following their recent sell-off by jittery investors.
China's economy has grown so much that even if it slows down its total demand for commodities will remain vast and keep prices high, according to Richard Davis, manager of BlackRock Commodities Income Investment Trust .
In our video interview Davis discussed the impact of speculators and also how the US government's efforts to stimulate the US economy had contributed to the recent fall in commodity prices.
Davis believes that investors are undervaluing commodity stocks - whether they be miners or energy companies - because of a widespread belief that commodity prices will start falling. Although he sees volatility he expects no change in the upward trend in commodities.
BlackRock Commodities Income trades at a premium to its net asset value of more than 2%. In other words the trust's shares are worth more than the assets it owns which are shares and bonds in commodity firms. The trust pays four quarterly dividends and is aiming to have paid at least 5.6p per share in dividends by November 2011. With its shares currently trading at £1.46 that represents a 3.8% yield.
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