Amid across-the-board gains in the Singapore market, commodity
plays are outperforming, with Wilmar (F34.SG) +3.4% at $5.24, Noble
(N21.SG) +2.3% at $2.24 and Golden Agri (E5H.SG) +2.2% at $0.700 vs STI
+1.1%, as investors bet the rise in oil prices (front month Nymex crude
futures settled above US$100/bbl ($127/bbl) Wednesday, the first time
since 2008) will boost the prices of other commodities.
“I think it’s largely the psychology that commodities only have one way to go, and that way is up. I don’t necessarily agree with it, but that’s what’s driving the market. If you take oil for example, automatically things like coal are expected to rise and some of the grains too because of bio-diesel, and other substitutes also rise,” says a dealer at a foreign brokerage.
“With the Middle East tensions likely to last a while longer, it
means oil prices will remain elevated and people will continue to hunt
for substitutes, which makes the argument for commodities a little bit
stronger in the short term.”
