Investors should always look to profit from global trends.
That's especially true since emerging markets around the
world have been driving much of the global economic growth.
In its report, "Urban World: Cities and the Rise of the
Consuming Class," the McKinsey Global
Institute projects one billion people will enter the global
consuming class by 2025 as a result of more living in cities.
Three exchange traded funds that should profit from that mass
migration are iPath DJ-UBS Copper (NYSE:
), Market Vectors Coal (NYSE:
), and Guggenheim Shipping (NYSE:
The McKinsey study estimates 600 cities around the world will
generate almost two-thirds of global economic growth by 2025. And
that statistic means a great deal of copper will be
consumed. Copper is critical for the construction process in new
buildings for pipes, wires, and other materials. The myriad of
other needs for copper in a growing economy include power
generation, heating systems, and many, many more uses. China and
India, where much of the urban expansion will take place, are two
of the world's biggest consumers of copper.
Coal provides most of the fuel already used for heating and
electricity in China and other emerging market nations. Asia
gobbles up about two-thirds of the world's coal, much of it
imported. It is an ideal fuel source for emerging market cities,
as it does not require the expensive network of pipelines needed
for oil and natural gas.
It can also be carried in a sack or pushed in a cart. In just
one example of the expanding market in Asia, demand for coal in
Indonesia is expected to triple from 100 million tonnes to 300
million tonnes by 2030, according to the Indonesian Coal Mining
Most of these commodities will have to be imported from
overseas markets, with China as the largest consumer of both
copper (about 40 percent) and coal (over 50 percent).
As a result, shipping should rebound along with the rise of
the emerging market urban class. Coal and copper will have to be
carried from mining operations in Australia, North America and
Latin America to ports chiefly in Asia. The demand for coal
transported by ships in Southeast Asia is expected to increase
from 53 million tonnes in 2013 to 248 million tonnes in 2035,
according to Wood Mackenzie, an energy consulting firm.
As economic growth in China rises, so too have share prices
for Market Vector Coal, Guggenheim Shipping and iPath DJ-UBS
Copper. Down more than 20 percent for 2013, Market Vector Coal is
up more than 12 percent for the last quarter of market
Off by 12 percent for the year, iPath DJ-UBS has increased by
over four percent for the same period. Guggenheim Shipping has
risen more than nine percent for the last three months alone.
Greater urbanization in China and other emerging market nations
should continue to take the share prices for these exchange
traded funds even higher into the future.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.