Market Vectors' director for investments and portfolio strategy, Russel Chesler, believes demand for commodities will continue, driven by growth in emerging markets and a resurgence in developed market consumption.
“This, together with possible near-term merger and acquisition activity, should support the value of Australian resources companies this year, which are well positioned for any upturn,” Mr Chesler said.
“Investors want to be part of an upswing if it comes and they are turning to resources companies as a source of expected gains.
“The sector is also currently delivering income yields well in excess of inflation, making it even more attractive.”
Commodity stock values are relatively low at present and the sector could see some consolidation, Mr Chesler said.
“Some of the smaller resources companies may have assets of interest to the big companies, which are reviewing costs to improve business profitability,” he said.
Van Eck Global's co-portfolio manager for global resources strategy, Shawn Reynolds, said gold stocks could also rebound this year, building on the rally of recent weeks. Gold fell by 28 per cent in 2013, its largest calendar-year decline in 32 years.
“We believe gold is forming an important base around the US$1,200 per ounce level and this recent resilience adds to our conviction,” Mr Reynolds said. “We believe gold mining companies are well positioned for an improvement in the gold market.”
Market Vectors is the exchange-traded funds business of Van Eck Global.
