- Commodities and commodity-linked equities were among the few standout performers in the first half as inflation disrupted most asset classes.
- Positioning in these assets has been curbed recently due to growing fears of a recession.
- However, commodity-linked assets remain attractive, as these exposures remain inexpensive and we believe sentiment has deteriorated much more than fundamentals.
- In our view, global economic activity is decelerating but not yet contracting, and supply growth in commodities is likely to remain constrained in the near term.
- Importantly, Chinese growth is picking up as developed-market activity moderates.