Many sectors are on the rise and the use of exchange traded funds (ETFs) is a good way to capitalize on a global recovery.
The world economy is predicted to expand modestly in the fourth quarter of this year, followed by “subpar growth” in 2010, according to the Organization for Economic Cooperation and Development. Some of this growth is already becoming evident in emerging markets.
Even though there are still some lingering signs of fear in the market, many emerging markets have crossed their 200-day averages and there are other areas to watch as an indirect way to play the growth and eventual recovery of the global economy.
Copper. Average world copper price for 2009 will remain under $1.90/lb, but 2010 prices are projected to be at $2.09/lb, reports Tom Stundza for Purchasing. Strategists are basing the 2010 outlook after estimating a global GDP growth of 2.6% for 2010 compared to the previous 1.9% growth rate predicted by the IMF.
- iPath DJ AIG Copper TR Sub-Idx ETN (JJC): up 49.2% year-to-date
Steel. In China, steel prices have been steadily increasing for long products in the construction sector, according to Reuters. But the recovering steel price may reverse as a result of high domestic production and imports continuing to keep the markets oversupplied with steel.
- Market Vectors Steel ETF (SLX): up 36.2% year-to-date
Infrastructure. Urbanization and infrastructure gap in emerging nations are two evident trends, as stated by TheStockAdvisors. Countries that support urbanization will continue to experience economic growth and international trade. Without infrastructure, emerging countries would be unable to maintain the ability for sustainable growth.
- PowerShares Emerg Mks Infrastructure (PXR): up 34.8% year-to-date
Shipping. When the global economy recovers, countries will increase trade and the best way to track this is through shipping. The shipping industry may also experience growth before countries because raw materials will needed to be shipped out beforehand.
- Claymore/Delta Global Shipping (SEA): up 13.4% year-to-date
Silver. When demand for appliances increases, so will demand for the silver and copper for use in wiring. It is also a good hedge, like gold, for inflation. But unlike gold, silver is cheaper.
- iShares Silver Trust (SLV): up 29.5% year-to-date
For full disclosure, Tom Lydon’s clients own shares of SLV.
Max Chen contributed to this article.