Kastel ... "gulp" yup, I'll say... that's the third time I've seen it do that ... and this is the first time I didn't panic ... still long without a care in the world. <vbg>
FUND VIEW-JP Morgan eyes rich pickings in copper, nickel By Tom Burroughes
LONDON, March 9 (Reuters) - Further rapid economic expansion by commodity-hungry countries such as China has prompted the manager of JP Morgan's Natural Resources Fund increasingly to favour producers of base metals like copper and nickel.
Firms extracting these metals look some of the most attractive investment picks in commodities, JP Morgan's Ian Henderson told Reuters this week.
His portfolio invests in firms producing oil, gas, metals and precious gems like diamonds.
Stocks of base metals are lagging behind expected demand and should ensure prices remain buoyant in the months ahead, even though markets have already risen a long way, Henderson said.
"The base metal producers, particularly in copper and nickel...represent interesting opportunities today," he said.
The joint-top single holding of the fund, copper producer First Quantum Minerals, accounts for 3.0 percent of the 120 million pound ($222.1 million) portfolio.
Metals producers account for other top-10 stakes in the fund, such as International Nickel, at 2.3 percent of the portfolio.
Potential for further rises in metals like copper was underscored when base metals analyst Greg Barnes of Canaccord Capital said recently that London Metal Exchange (LME) copper stocks could fall to zero by the middle of 2004.
Copper prices have soared 90 percent since the start of 2003 to last week, when the metal hit an 8-1/2-year peak on the LME of $3,055 a tonne as a result of strong demand from China and limited supply due to output disruptions.
Henderson hopes buoyant commodity markets ensure his fund continues to rack up some of the strongest performance figures for a British retail fund.
Over the past three years to date, the fund's total returns have risen 111.87 percent, while its peers in the specialist sector of funds fell 26.32 percent, according to the research firm Lipper.
STRONG OIL PRICES
Henderson also expects oil and gas extraction businesses to remain fruitful investments because demand is likely to significantly outpace supply, particularly in view of low oil stocks in the energy-hungry United States.
"Oil inventory levels in the U.S. are the same that they were in 1971. Stocks are very low. I think the whole energy sector is mispriced because oil is going to stay high for longer (than expected)," Henderson said.
The JP Morgan fund's other top holding, also accounting for 3.0 percent of the portfolio, is oil and gas exploration and producer First Calgary Petes (Toronto:FCP.TO - News).
Although Henderson's central expectation is a stronger economic outlook, with punchy gains in countries such as China and India, he said commodities prices could be slammed if China, for example, met economic trouble.
Other major holdings include Bema Gold (Toronto:BGO.TO - News) and Devon Energy Corp (AMEX:DVN - News).
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