Ken Courtis is predicting we may be on the verge of another commodity supercycle.
“Unlike many, I think the outlook for commodities is not that bad … I believe we have a supercycle ahead of us for the next 10 or 15 years in the commodities space again,” said Courtis in an interview on BNN.
The chairman of Starfort Investment Holdings says there are mega infrastructure projects in the works across Asia that will dwarf spending plans proposed by U.S. President Donald Trump's administration.
“Trump has talked about a trillion-dollar investment plan,” Courtis said. “What’s going on in Asia is 26-times bigger than that. It’s not just China, it’s all of Asia.”
Courtis, who was previously vice-chairman of Goldman Sachs Asia and currently serves on Finance Minister Bill Morneau's Advisory Council on Economic Growth, points to numerous infrastructure banks and programs across the region that are funded and getting ready to start building.
“You have the Asia Infrastructure Investment Bank, capitalized at $200 billion dollars,” he said. “You have the New Development Bank, it’s like an emerging market International Monetary Fund. It’s capitalized at $250 billion dollars … then you have all of these national programs,” he said.
Courtis expects that as these programs begin to develop their projects and spend, there will be a surge in demand for raw materials.
“The money is coming,” said Courtis. “It’s starting to move. That’s going to lead to lots of demand for cement, iron ore, steel, copper. You name it.”
He also sees crude oil rising, climbing to the mid US$70s-per-barrel range by this time next year.
Courtis added he isn’t concerned about emerging economies possibly overleveraging their balance sheets to fuel growth.
“When we think of governments and countries that have a lot of debt, we’re actually talking about developed countries,” he said. “The emerging markets, with exception, have really great balance sheets,” he said.
“The infrastructure will give them better growth, better productivity, more tax revenues. So I’m not worried at all.”