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Game changers for SA investors

Johannesburg - On Wednesday an interesting landmark was reached.
 
The MSCI World Index of 1 660 companies in 24 major economies erased all the losses it had sustained after the collapse of investment banking group Lehman Brothers, which signalled the start of the global economic meltdown.
 
While the last two years are likely to be remembered for remarkable rebounds in global equity prices, investors in 2011 may well need to brush up on their knowledge of commodity and currency trading to get a better return on investments.
 
As a year ends, asset managers are usually quick to roll out press releases detailing their Christmas stock picks for the new year. In 2010 the silence has been deafening.
 
In contrast, over the past year product development in the currency and commodity sector has been telling.
 
Recently Rand Merchant Bank (RMB) rolled out its oil exchange-traded note (ETN), which follows Standard Bank's oil warrants and  precious metals suite of platinum, palladium, gold and silver "linkers".

There are rumours that it could roll out a retail agriculture product in the not-too-distant future.
 
Feedback from retail trading houses such as Global Trader indicate that their trading desks are seeing a lot of interest in currencies, and Fin24 has learnt that Easy-Forex is going to be the latest currency house to set up shop in South Africa.
 
All indications are that South Africans are becoming increasingly comfortable with trading products other than traditional local equities.

In addition, analysts say that many of the new products related to commodities and currencies are less speculative and volatile and can be used as part of longer-term investment strategies.

A good example is the Newgold exchange-traded fund (ETF), which has proven exceptionally popular.
 
Throwing fuel on this fire is international trading heavyweight Goldman Sachs. It recently released its top five recommended trades for 2011, which makes for interesting reading.
 
Two out of the five trades are equity plays - long US banks and the Japanese Nikkei. The third trade is long US High Yield Corporate spreads.

On the currency front, it recommends betting against the dollar versus the Chinese yuan and in commodities, investors should be long on a basket of crude oil, copper, cotton or soybeans and platinum.
 
With analysts indicating that market conditions are likely to be "benign" in 2011, investors may need to reassess the tools they have in their armoury to continue generating long-term returns.

This means taking the time to learn about new products in the new year.
 
- Fin24
 
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