Archive for 'CSGN'

Commodities Sluggish But Still Outperform Equities

Commodities demonstrated mixed performance in August as market participants grew increasingly concerned about the extent of the global growth slowdown.

Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management division, said, “Commodities demonstrated mixed performance in August as weaker macroeconomic data and uncertainty surrounding the state of the global economy continued to impact markets.  Falling consumer confidence, poor non-farm payroll figures, and other weak leading economic indicators are increasing recessionary fears.  However, realized data from July on global industrial production momentum indicated a rebound began in May.  Chinese trade data for July suggests economic activity is still robust, with imports of key commodities remaining strong.  Fundamentals for key commodities look to be growing increasingly tight in the face of strong demand and constraints on supply growth.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “While increased volatility and risk aversion were common themes across capital and commodity markets in August, commodities outperformed equities with the S&P 500 losing 5.43%.  We believe investors will continue to benefit from the diversification benefits that commodities provide.”

The Dow Jones-UBS Commodity Index Total Return was up by 1.00% in August.  Overall, 8 out of 19 index constituents increased in value.  Precious Metals was the strongest sector, gaining 10.10% for August, due to continued strong investor demand.  Agriculture was also a strong performer, up 9.22%, led by grains and Coffee.  Estimates for Corn yield were reduced to lower than the USDA’s latest estimates amid the recent hot and dry weather damaging the developing crop. This may suggest that the USDA will ultimately reduce their production and ending inventory expectations.  Livestock ended the month lower, losing 4.60%, led by Lean Hogs on expectations that previously strong China export demand may ease and that hog weights may improve in the fall.  Higher feed costs also mean livestock may be brought to market sooner than expected.  The Energy sector posted a loss of 4.92%, with all components trading lower.  Fundamental data releases remained broadly supportive for the crude complex, but concerns increased that demand would eventually falter.  Industrial Metals was the worst performing sector, given the sector’s high correlation with global growth, ending the month down 7.48%. Fears of a hard landing in China weighed on the sector, as did concerns growth would slow in the developed world.

The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team’s white paper, “Commodities Outlook: Increased Volatility, Increase Opportunity?“, please email csam.commodities@credit-suisse.com.

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy has been managed for 17 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:

  • Spot Return: price return on specified commodity futures contracts;
  • Roll Yield: impact due to migration of futures positions from near to far contracts; and
  • Collateral Yield: return earned on collateral for the futures.

As of August 31, 2011 the team managed approximately USD 11.4 billion in assets globally.

An investment in commodities is not a complete investment program and should represent only a portion of an investor’s portfolio management strategy.  Investment in commodity markets may not be suitable for all investors. Commodity markets are highly volatile and the risk of loss in commodities and commodity-linked investments can be substantial.

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 offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 50,700 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.

Asset Management

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.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

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.

Copyright © 2011, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.

CONTACT: Katherine Herring, Corporate Communications, +1-212-325-7545, katherine.herring@credit-suisse.com

Web Site: http://www.credit-suisse.com

Investors expect to increase commodity investments over the next 12 months, even though short-term uncertainty is keeping them on the sidelines for now, according to a new survey by Credit Suisse.

Credit Suisse conducted the survey as part of its inaugural 2011 New York City Commodities Day on Tuesday, June 28, with a gathering of nearly 400 clients covering a wide cross section of institutional investors, retail distributors, mutual funds and hedge funds.

The survey found that 36% of investors classified themselves as currently “underweight” in commodities, with a further 10% having zero exposure. However, when asked about their expected investment level over the next 12 months, 40% expected to become “overweight” commodities and only 3% as still having zero exposure.

Two-thirds ( 65%) of respondents believe that commodities prices in 12 months will be around current levels or higher, with roughly half of those expecting prices to be at least 10% higher. That compares with only 13% that expect prices to be at least 10% lower, but a significant proportion (23%) admitted to having “no idea”.

Despite the recent moderation in oil prices, investors remain bullish on crude oil, with 76% believing that the oil price has yet to peak. Dismissing a dominant role of market speculation in determining oil prices, 72% said they believe energy prices are primarily driven by market fundamentals. Copper remains the favorite base metal, with 59% seeing it has having the best 12-month outlook of the group. However, the price path for commodities is expected to remain challenging, with 55% expecting realized price volatility to increase over the next 12 months.

The survey also examined the trend away from broad market benchmarks into more specialized products for commodity exposures. 45% of respondents said they view commodity ETFs as likely to receive the greatest asset flow, while 40% saw active indices and fundamentally based directional trading as the key growth areas. In comparison, only 5% said beta benchmarks will be growth products within commodities. In a separate question about Dodd-Frank regulatory changes, 74% said they expect no significant impact on their commodities investment activities.

“Overall sentiment towards commodities as an asset class is constructive, but investors are under allocated due to concerns about short term direction and volatility,” said Oscar Bleetstein, Head of Commodity Investor Sales for the Americas at Credit Suisse.  “However, the survey confirmed our views that if and when confidence starts to return, investors are likely to increase exposure significantly and find managers or products that can accommodate this new environment.”

Credit Suisse

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 offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 50,100 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.

Investment Banking

In its Investment Banking business, Credit Suisse offers securities products and financial advisory services to users and suppliers of capital around the world. Operating in 57 locations across 30 countries, Credit Suisse is active across the full spectrum of financial services products including debt and equity underwriting, sales and trading, mergers and acquisitions, investment research, and correspondent and prime brokerage services.

Asset Management

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.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

http://www.credit-suisse.com

Commodities Keep Rolling Along

Commodities posted gains in April despite mixed macroeconomic conditions. Prices were supported by increased inflation expectations and ongoing tensions in the Middle East.

Nelson Louie, Global Head of Commodities at Credit Suisse Asset Management, said, “Prices of risky assets generally increased for the month of April, while the US dollar continued to weaken. Precious metals once again took the spotlight in April, posting strong gains amidst currency uncertainty. Investor focus shifted towards the US debt burden, after Standard & Poor’s put the US on negative watch for the first time. Meanwhile, other countries, such as the UK, France and Germany, have also taken steps to address deficit reduction issues. Concerns over accelerated inflation in various parts of the world, and the future plans of troubled European nations, added to the risk premium for precious metals, while the ongoing situation in the Middle East coupled with strong export demand pushed Crude prices higher.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “With economies around the world improving, and continued extraordinarily loose monetary policy in the United States, odds of inflation overshooting historical levels and expectations remain elevated.  We believe investors will continue to benefit from the diversification benefits that commodities provide.”

The Dow Jones-UBS Commodity Index Total Return was up by 3.46% in April.  Overall, 11 out of 19 index constituents increased in value, with Precious Metals serving as the strongest sector as both Gold and Silver increased. Energy continued to fare well in April, gaining 5.90%, with Gasoline and Crude Oil leading the way, up 8.92% and 6.08% respectively.  Agriculture was neutral with mixed performance from its components. Gains on Corn (+7.70%) and Coffee helped to offset losses from Cotton and Sugar.  The Industrials Metals sector was down slightly, declining 0.50% for the month.  Concerns remain that Chinese economic growth may slow, curbing base metals demand.  Livestock was the worst performing sector, down 7.12%, erasing its gains from the first quarter when it was the Index’s top performing sector.  Lean Hogs fell 8.32% while Live Cattle declined 6.30% due to signs that consumers were curbing demand amid higher retail prices.

The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of their white paper, “How Commodities Can Help Investors Face the Uncertainty of the Inflation/Deflation Debate“, please email ir.betastrategies@credit-suisse.com.

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse’s Total Commodity Return Strategy has been managed for fourteen 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 a quantitative commodity research process. Commodity index total returns are achieved through:

  • Spot Return: price return on specified commodity futures contracts;
  • Roll Yield: impact due to migration of futures positions from near to far contracts; and
  • Collateral Yield: return earned on collateral for the futures.

As of April 30, 2011 the team managed approximately USD 10.7 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 offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 50,100 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.

Asset Management

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.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

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.

Copyright © 2011, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.

CONTACT: Katherine Herring, Corporate Communications, Credit Suisse, +1-212-325-7545, katherine.herring@credit-suisse.com

Web Site: http://www.credit-suisse.com