jp morgan disagrees with you vidi

J.P. Morgan says commodoties undervalued by 30%
By Karl Heilman
25 Sep 2006 at 12:24 PM

Ian Henderson, manager of JP Morgan Natural Resources -- the top-performing fund in the IMA All Companies sector over the past five years according to Trustnet data -- told Reuters commodities are trading at a "very substantial discount to the broader market at large".

"The outlook remains that demand for commodities is going to continue to run at faster than GDP (gross domestic product) growth for quite a number of years and the industry is going to be hard-pressed to increase production fast enough," he said.

"As a result, prices received by producers are going to be supported for much longer than people expect and this industry is going to be enormously cash generative."

China is "absolutely critical" to rising demand, he said, but added that a boom in consumption in India had yet to be factored into the market.

"India has the same population, and uses about a fifth of the commodities that China uses," he said.

Henderson believes takeover activity in the sector will continue, with firms being prepared to pay a premium of some 30 percent to acquire assets.

"Today, I think the sector is about 30 percent undervalued," he said.