Glencore, has painted an upbeat outlook for raw materials markets, stating that physical demand remains “healthy” worldwide.

This is the opening line from an article published in the Financial Times earlier this week. The comment comes during a week when sectors across the commodities market experienced a sharp drop in prices. This price slump has been attributed to investors moving away from risky assets amidst fears about the situation in the eurozone. So why does Glencore forecast such a rosy outlook?

Whilst the company acknowledges troublesome Europe, it also recognizes strengthening commodity demand from the US. Moreover, it predicts healthy demand from the Chinese market.

However, some skeptics may question if such a positive outlook from the Swiss-based trading house perhaps has something to do with the company’s publicly listed shares which would surely benefit from optimistic predictions?

What would your thoughts be?

The systematic and quant fund space is become ever more popular. With the success of CTAs in the 2007/2008 crisis, and their role as diversifiers confirmed in investor consciousness, a once niche area has now become mainstream. While this acceptance is of course good news for quants and CTAs, it leaves a new question hanging – when systematic strategies are often so similar, how can funds differentiate themselves from each other?

The answer could be found in social media mining. Information sources such as twitter provide a completely new source of information which has the potential to predict market moves and flag up developments before traditional media outlets have even noticed them, let alone published their guidance. The premise is that market behaviour is typically driven by non-rational human characteristics, and if you believe this theory, then individual and company tweets and the like a day make an all-seeing window into the market.

Recent research by Johan Bollena, Huina Maoa,(of Indiana University) and Xiaojun Zengb (University of Manchester) has shown that the public mood, as expressed in social media, provides “an accuracy of 86.7% in predicting the daily up and down changes in the closing values of the Dow Jones Industrial Average”.

This seems to be catching on. Derwent Capital launched a “twitter fund” in 2011, and initial results were certainly positive (although more recent results are unavailable), and interest in this sector is increasing, with unverified reports of other funds using this analysis alongside their existing methodologies

So, with the wealth of information available via social media data mining, can anybody make money from tweet analysis? Well, unfortunately not. There are usually over 250m tweets a day, and systematically sorting through them is no easy task – it takes dedicated software and expert analysis to event consider this. But signs are that, as social media continues to develop, this will become an important weapon for hedge funds to deliver alpha not beta for their investors.

A recent article on hedge fund transparency was published in the pensions and investments publication which shed some light on the transparency – or opaqueness – in the global hedge fund industry. Whilst many would have expected 2007 / 2008 to lead to a greater level of transparency, and a general clean-up of this field, in the last 2 years there have been almost 60 convictions or guilty pleas by hedge fund executives or consultants.

Transparency has been a watchword for funds and investors alike in the recent past, but what can be done in an industry which has thrived in opaque waters, and where full transparency can lead to a drop in performance? Jay Eisenhofer, from Grant and Eisenhofer PA suggested, in the article that the answer lay in ensuring hedge fund regulation means their fiduciary duties are “explicit, irrevocable and publicly recognized”, something which is not the case at present. But is this realistic, given the differing legislative environments globally, where hedge funds can move to instead?

Likewise, a working group has been set up to drive the “open protocol enabling risk aggregation standards”, which includes consultants, fund managers, large-scale investors and technology providers, who promote standardised reporting procedures for collection, collation and conveying hedge fund risk information – consistent industry practices investors can relay on. Whilst this will not stop a rogue operator, it should provide a standardised level of expectation from investors, meaning transparency and risk awareness are driven from the bottom up.

The underlying question is, without the vocal and overwhelming support of investors – and a sharp drop in allocations – will hedge funds or regulators take the  difficult decisions needed to mean transparency is more than just a good buzzword drowned out by absolute returns? I’d love to hear your thoughts below…

I recently spoke with 15 investors in the Middle East, all of whom I asked to predict which commodities will offer the best long term investment opportunities. The three to come out on top were gold, oil and agriculture.

Gold is usually seen as a safe haven for investors given its attractive hedging capabilities against inflation. As the global economy continues to bolster uncertainty and the introduction of soft monetary policies, many predict that gold prices will remain firm. However, should the price plummets over the last week prove cause for concern?

Oil also took a hit in the last week to the price of $110.34 a barrel due to concerns about the eurozone. However, as Japan closes the door on its nuclear power programmes this will undoubtedly have a significant effect on the demand for oil. The geopolitical unrest in the Middle East will also have an affect on the price of crude.

In our survey for commodities the agri and softs sector has proved to be the most popular choice for Middle East investors when asked which commodity group has the greatest investment potential for two years running now. With more and more emphasis being put on clean fuel and energy, there has been a significant move towards biofuels which has surely impacted the food price volatility debate.

Download this years survey

Please let me know your own thoughts on these 3 sectors and what’s in store for the future?

At the 2011 Agriculture Investment Summit Asia, Ms Belinda Moore, Senior Analyst at RBS Morgans, shared on why the Australian agriculture sector remains attractive. In her presentation, she identified the issues facing Australian agriculture, including potential carbon tax and carbon faming initiative, drought and climate change, farmers getting older, debt levels, rising input costs and more. However, the sector remains as an attractive for investment due to strong soft commodity prices, strong management team, recent acquisitions and more. If you are keen to read her full analysis on the Australian agriculture industry, download the presentation here.

About Belinda Moore

As a senior analyst at RBS Morgans since 2002, Belinda has a plethora of experience. Her research presently covers Australian Agricultural Company Limited, Elders Limited, GrainCorp Limited , Incitec Pivot Limited and MSF Sugar amongst many other well known Agriculture companies in Australia putting her in the best position to discuss the opportunities which present itself in the Agricultural landscape in Australia.

About RBS Morgans

RBS Morgans was formed by a merger of Morgan Stockbroking Limited, one of Australia’s premier retail brokers, and stockbroking arm of RBS Australia (then ABN AMRO) in October 2000. The merger created Australia’s largest national full-service retail stockbroking and financial planning organisation with over 340,000 clients, 490 Authorised Representatives and 820 staff operating from 60 offices and branches in all states and territories.

If you are keen in hearing more of such topics, don’t forget to join us at the 2012 Agriculture Investment World Asia. You can download the agenda here to find out what will be covered this year.

Download the presentation from Constantin Salameh CEO –AMS Group, which looks at the flowing key topics:

• GlobalEconomicPerspective.
• MENA Outlook and Challenges.
• Changing GCC Investment Landscape.
• Three Investment themes in 2012.

Download here

If this topic is of interest to you you might be interested in attending The Diversified Asset Show Middle East, a 5 end-investor events in 1, where local investors access top performing funds from across all asset classes. Over 2 days, more than 600 attendees will participate in multiple event streams, panels and breakout sessions that address the best ways to generate alpha in volatile global markets.

Download the brochure| Download the partnership prospectus | Register for conference |

Will gold prices go up or down in the next 6 months?  When Mark Mobius, Marc Faber, Mishal Kanoo and John Taylor Jnr were in town last month for the Hedge Funds World Middle East conference, we asked them for their forecasts.

Executive Chairman of Templeton Asset Management, Mark Mobius told us that he believed that as money supply has increased dramatically in most major economies, gold prices are bound to go up.  Likewise, Marc Faber, Editor of the Doom, Boom and Gloom report, explained his view that “given the propensity of all central banks to print money, the price of gold will be much higher over time”.

Chairman, CEO and Founder of FX Concepts, John Taylor Jnr shared his belief that “gold will have a push behind it as the major currencies of the world get weaker relative to commodities”. 

However, on the other side of the fence, Mishal Kanoo, Chairman of The Kanoo Group, told us that he believes gold is hyper-inflated.  He explained “[gold] has gone up 6 times since 2001 and nothing can sustain itself at that rate – it has to come down.  The problem for managers is to figure out when it will come down”.

To hear the full responses from Mark Mobius, Marc Faber, Mishal Kanoo and John Taylor Jnr, watch the video below.

Why are investors choosing ETFs over mutual funds?

Because ETF investments offer…

• Lower costs
• Greater transparency
• More liquidity
• Better tax efficiencies

And according to Jonathan Steinberg, Founder & CEO of WisdomTree, ETFs are set for "literally trillions and trillions and trillions of future growth” and that "the ETF is to the mutual fund, what the internet is to the newspaper." Read the complete article here

Do you agree or are your standing by your mutual fund investments?

Share you thoughts by posting comments below…

Or find out more about how to make the most of the cost benefits of ETF investments over traditional mutual funds at the ETF & Indexing Investments Europe 2012 conference. Visit the website to find out more

Will Middle East equities bounce back in the next 6 months?  We asked Marc Faber, Mark Mobius and Mishal Kanoo for their views when they visited Dubai last month for the Hedge Funds World Middle East and Middle East Investment Summit conferences.

Emerging markets expert and Executive Chairman of Templeton Asset Managenent, Mobius told that he believes Middle East equity markets are already beginning to bounce back, despite turmoil resulting from the Arab Spring.  “Many companies in the Middle East have already begun to move up again” he said.

Mishal Kanoo, in reference to his views on the GCC and Eqypt, told us "Egypt is a place that you’ve got to be".  As for Saudi Arabia, the Chairman of the Kanoo Group believes that the country’s proposed move to allow foreign entities to list on the Saudi market will be a massive catalyst for moving the country’s market upwards.  With regards to the UAE and Qatar, Mr Kanoo felt that market sustainability will be dependent on company results.  He explained "if companies achieve good earnings, then the sustainability is there".

For the full responses from Mark Mobius, Marc Faber and Mishal Kanoo, watch the video below.

China has recently agreed to make an investment of close to USD440 million of construction costs of a fertilizer factory in Sylhet. This is by far the 2nd largest investment made by any country in Bangladesh. (India has previously made a $1.5 billion investment in a Bangladesh coal-fired power plant in January).

The factory is expected to be completed by 2015. Once done, it is expected to produce around 580,800 tonnes of urea and 330,000 tonnes of ammonia.

View the full article on agropages here.

If you are keen to find out the investment opportunities in emerging markets in Asia, you should not miss out on Agriculture Investment Summit Asia, held from 16-18 October in Singapore. For more information on what will be covered in the 2012 event, download the agenda here.