David Kostin, the chief US equity strategist at Goldman Sachs, says investments in the commodities sector may have huge upside in the next year as China's economic reopening accelerates.
Investors should look at parts of the economy that will keep growing, Kostin says, citing sectors of the US stock market that will gain from Beijing's lifting of the country's zero-COVID policy. "How should [a US investor] be positioning a portfolio when there's this positive development that's happening in China yet there's this tension geopolitically between the two countries?" Kostin told"We're looking here at US companies...metal and mining companies that will benefit from the global demand largely driven by China for some of the commodities," he added. He mentioned companies such as Freeport-McMoRan Inc.
Goldman Sachs analysts forecast a 30% increased in the S&P GSCI, an index that broadly measures the performance of the commodities sector, within the next year. The International Monetary Fund forecasts China will become the over the next five years. The country will contribute 22.6% of total growth, while the US will contribute 11.3%, per Bloomberg calculations from data in the IMF's World Economic Outlook earlier this month.