BlackRock bullish on copper, iron ore

[] — BLACKROCK Inc, the world’s largest money manager, is overweight copper and also favours iron ore, the firm’s resources-division chief Evy Hambro said on Monday, citing strong underlying Chinese commodity consumption undented by steps to curb growth.

China, the world’s largest importer of copper and iron ore, is to supplement its own massive supplies and sent shivers through financial market last week following a surprise interest rate hike. China is also the world’s biggest gold producer.

“We are very comfortable with the way the Chinese economy is going right now,” said Hambro, whose division holds no direct stakes in commodities but manages about $33bn in investments in mining companies and other producers.

“The measures taken most recently with regards to raising interest rates are signs of success. The economy continues to be strong and they are trying to make sure the rate of growth remains healthy and sustainable,” Hambro told a media briefing.

An advisor to the People’s Bank of China Xia Bin, was quoted as saying on Monday that China is facing pressure to raise interest rates further after the surprise increase of a quarter of a percentage point last week.

Catherine Raw, a director and portfolio manager for BlackRock, told the briefing China aimed to avoid a “boom-bust scenario.”

China raised benchmark lending and deposit rates last Wednesday, the first increase in nearly three years on concern about rising asset prices and stubborn inflation.


China’s need for coal to make more steel had led the country to shift from coal exporter to importer, improving the fortunes of foreign producers, including BlackRock’s two largest investments, BHP Billiton and Rio Tinto, according to Hambro.

The money manager declined to give a forecast for gold, but predicted a lack of world production growth, a growing appetite among central banks to hold more gold and the metal’s role as a safe-haven investment should lead to further price increases.

Gold dropped more than 3% last week following China’s rate hike, after climbing to a record high the previous week but has since showed some recovery.

BlackRock had $3.15 trillion in assets under management as of June 30 2010, according to its website.