Increased price volatility in copper prices could ensue as China continues to implement stimulus measures to boost growth. Whether it is or isn’t enough will weigh heavy on copper prices moving forward.
Investor sentiment, as capital markets are well aware, can change quickly. While investors cheered the latest round of stimulus measures by China to prop up its economy, the lack of additional stimulus may have soured sentiment. Given that China is a top consumer of copper, its demand will continue to sway prices.
“The market reaction speaks for itself, with investors disappointed by a lack of clarity over more forceful action as the NDRC continued to voice confidence in the economy. With investor expectations running high into the NDRC press conference, the outcome represents a setback for those anticipating additional swift action from Beijing,” said analysts at UBS, who predicted more volatility in China stocks, which could spill over into copper prices.
“We see limited chance of meaningful demand stimulus near term, specifically one that is geared towards consumers. Foreign investors could take a ‘not trust but verify’ approach, evaluating Beijing’s commitment on reflation,” added Morgan Stanley’s China economics team led by Robin Xing.
2 Trade Opportunities to Watch
The ebb and flow of copper prices can also affect the demand for miners. As such, any recent dips in copper miners could open opportunities to buy equities at a value-oriented price. On that note, Sprott has a pair of copper mining funds to consider.
One is the Sprott Copper Miners ETF (COPP ), which tracks the Nasdaq Sprott Copper Miners Index (NSCOPP). The index tracks the performance of a selection of global securities in the industry. This includes producers, developers, and explorers that support the industry. Overall, COPP provides blanket exposure to this mining industry, focusing on large-, mid-, and small-cap mining companies.
Investors who want an even stronger growth trajectory, small-cap companies can also offer additional potential when the copper skews toward the upside. Again, investors can look to copper miners to help appease rising demand, but with a focus on small-caps. With that, consider the Sprott Junior Copper Miners ETF (COPJ ).
COPJ is ideal for investors who want to focus on even more aggressive growth prospects with small-cap exposure. The fund aims to provide investment results that track the total return performance of the Nasdaq Sprott Junior Copper Miners Index. The index incorporates mid-, small-, and micro-cap companies entrenched in copper-mining-related businesses.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Past performance is no guarantee of future results. One cannot invest directly in an index. For the latest standardized performance and important risk disclosures regarding Sprott investment products, including each fund’s prospectus, which should be read carefully before investing, please review each product’s webpage by clicking on the corresponding ticker:
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion: PHYS , PSLV , CEF and SPPP
Physical Commodity: U.UN COP.UN
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
