SGAM says wait on metal stocks

By Tyler Sitte

FRANKFURT (Reuters) - Investors who did not benefit from the rally in gold, energy and metals stocks should wait a while to enter the market, said a Societe Generale fund manager on Tuesday at an event in Frankfurt.

"There has been a lot of optimism regarding a global recovery and a Chinese recovery. We suggest waiting a while. September or October should present better opportunities," said Henrietta Lance, fund manager on Societe Generale Asset Management's (SGAM) Global Resources Equities team, which manages around 700 million euros (600 million pounds).

Over the medium term SGAM sees bright prospects for the gold, energy and metals sectors helped by a long-term increase in demand in emerging markets and coupled with supply constraints.

Looking at the gold sector, where SGAM is represented through its Equities Gold Mine Fund 971364X.DX and its Global Resources Fund A0MRH1X.DX, Lance said investors should exercise caution.

"This is a message that we have been giving for some time: that gold can correct and consolidate this summer. A fall back to 800 (dollars/ounce) wouldn't surprise us," she said.

Over the medium term, however, gold and investments in gold companies should show promise.

"Gold usually performs well in extreme financial environments," said Lance, who pointed to historically strong prices in times of both higher deflation and inflation.

SGAM's dedicated gold fund has top positions in Canadian miners Barrick Gold (ABX.TO), Goldcorp (G.TO) and Kinross Gold (K.TO).

It is overweight versus its benchmark, the FTSE Gold Mines index .FTGM, in Silver Wheaton (SLW.TO), Agnico-Eagle Mines (AEM.TO) and Yamana Gold (YRI.TO).

SGAM's 110 million-euro Global Resources fund is slightly overweight in gold even though it recently took some profits on gold sector gains. Its top three positions are in Goldcorp, Newmont Mining (NMC.TO) (NEM.N), and Barrick Gold.

CHINA WILL DRIVE COMMODITIES MARKETS

She said China's $586 billion (354 billion pound) recovery plan, which allocates 62 percent to infrastructure, should have a positive impact on base metal markets, with its strategic purchasing of copper and iron ore an important support for metals markets.

"We shouldn't fool ourselves, this buying could end at any time. But the amount China bought over the first six months of 2009 is 2.5 times what they bought during the same period in 2008."

Lance sees BHP Billiton (BLT.L), which derives 24 percent of sales from China, in a position to take advantage of this demand, as well as Rio Tinto (RIO.L) (RIO.AX).

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