The resources industry has performed well over 2016 and it may appear that it is ‘too late’ to increase exposure to this sector. Our analysis suggests that the recovery remains in its early stage. At its simplest level our investment case for resources is based on the interaction of demand and supply:

Demand…
We find clear evidence of a synchronised recovery in the global economy, which bodes well for companies that supply the global capital expenditure cycle.

Supply…
Our research finds there is genuine supply side restraint, a function of disciplined supply behaviour from resource companies as well as policy driven reduction in production capacity across an array of Chinese industries. To make our argument for an investment in resource companies we detail eight related justifications.