Commodities Opportunity Emerges Amid Underinvestment and Supply Shortages

A broad commodities opportunity is emerging due to underinvestment and supply shortages, according to UBS strategist Sagar Khandelwal. The bank recommends positioning for a commodity upcycle as electrification, AI infrastructure, and years of limited investment converge.

The combination of constrained supply, rising strategic demand, and persistent inflation and geopolitical risks argues for maintaining exposure to hard assets. This includes precious metals, energy, industrial metals, and agriculture, rather than concentrating on a single theme.

Copper prices have remained resilient despite concerns over global economic growth, with the long-term demand outlook remaining favourable due to electrification and AI infrastructure demands. The market may be moving into a period where demand growth repeatedly runs ahead of available supply, forcing prices higher to ration consumption and encourage new investment.