As governments tighten control over natural resources, direct commodity investing is becoming more complex. Gabriel Sacks, Lead Manager of Aberdeen Asia Focus plc, explains why the smarter play may be the overlooked businesses quietly benefitting from the boom.
In Goldfinger, the movie that arguably cemented James Bond’s status as a big-screen icon, a Bank of England executive named Colonel Smithers entrusts 007 with a hefty gold ingot. The plan is to employ it to forge a relationship with the titular villain.
“Mr Bond can make whatever use of it he deems necessary,” says Smithers, “provided he returns it, of course.” The briefest of dramatic pauses follows before he portentously adds: “It’s worth £5,000.”
This was no doubt sufficient to elicit gasps from cinema-goers back in 1964, when the film was released. More recently, thanks to a record-breaking price surge, £5,000 would buy you a grand total of approximately one-and-a-half ounces of the world’s most sought-after precious metal.
It is hard to imagine Herr Goldfinger being too impressed if Bond were to present him with a bullion haul roughly the size of a mini USB stick. By contrast, present-day investors are increasingly taking notice of both gold and the wider sphere of commodities.
There is a good reason for this: besides gold’s role as a hedge against economic uncertainty, raw materials are underpinning many of the major growth stories of our age. They are central to the rise of electric vehicles, clean energy, smart technology, artificial intelligence and other transformative mega-trends.
Unfortunately, commodity investing is not exactly known as a relaxing ride. Physical ownership brings storage, insurance and liquidity issues. Futures contracts can be unusually volatile and complex and, as such, are best left to highly experienced traders.
A further complication is that “resource nationalism” is very much back on the geopolitical and geoeconomic agenda. Resource-rich countries are striving to parlay their mineral wealth into far-reaching influence while at the same time ensuring more profit for themselves.
I was reminded of this when I spoke with my father-in-law earlier this year. He has a background in mining and lives in Brazil, whose reserves of rare earths are second only to China’s.
I asked why there is such scant evidence of businesses looking to utilise these reserves to, say, establish a trading partnership with the US or the West. My father-in-law explained that such activity is already in the hands of “big fish” in government and that even multinationals are struggling to get involved.
Much the same story is playing out in various emerging markets. Governments are pressing for enhanced state equity stakes, as well as a shift towards greater domestic processing. Regulatory intervention, stricter fiscal rules, contract renegotiation and even expropriation of foreign assets are among the policymaking weapons of choice.
Meanwhile, developed nations – not least those with imperialist ambitions – are seeking preferential access through “strategic partnerships”. These might entail security guarantees, diplomatic leverage and technical assistance. The US’s deal with the Democratic Republic of the Congo, sealed in December, is a classic example[1].
So where does all this leave investors? In a region like Asia, where our focus lies, one option is to recognise the ways in which it is possible to gain less direct exposure to commodities.
Miners are the go-to starting point. We hold Chinese gold-mining company Chifeng Jilong, which has fuelled impressive expansion through overseas acquisitions – including mines in Ghana and Laos – and last year augmented its capital base by listing on the Hong Kong Stock Exchange.
We also own two palm oil plantation businesses – Indonesia’s MP Evans and Malaysia’s United Plantations. Both represent a play on rising consumption in Asia and further afield, and each is an acknowledged leader in terms of sustainability and environmental responsibility.
Somewhat less obviously, there are numerous businesses whose links to the commodities sector are altogether more obscure but which are still capable of benefiting from its growth. Identifying these requires us to think a little more outside the box.
Take transport. Even allowing for the effects of resource nationalism, commodities need to be moved from A to B.
Looking at the bigger picture, we like South Korea’s HD Hyundai Marine Solution. This is a service-oriented company that helps maintain, repair and refit ships around the globe. With 50,000 purchase orders and 80,000 deliveries a year, it offers high returns and strong cashflow.
Similarly, consider the situation in Indonesia. The government has established a state-led agency to oversee the country’s largely untapped reserves of rare earths, and there is a major push to start refining nickel and other metals crucial to the electric battery supply chain – as opposed to merely extracting them from the ground.
Such developments could boost the long-term prospects of a business like Jakarta-based AKR Corporindo. Aside from being a key provider of logistics, the company has an integrated industrial estate and port that is attracting significant overseas investment.
As Colonel Smithers no doubt appreciated, the financial sector also tends to bask in commodities’ reflected glory. This may bolster the attractions of a holding such as PT Bank OCBC NISP, which stands to gain if mineral production continues to swell Indonesia’s coffers.
The fundamental point here is that it can pay to dig deeper – pardon the pun – when contemplating investing in commodities. Despite what Bond was led to believe, ingots are far from the only game in town.
Yes, gold has been racking up a suitably glittering array of headlines, and investors could be forgiven for struggling to look beyond it. But in this arena – as in so many corners of the investment universe – there are plenty of hidden gems waiting to be discovered by those prepared to explore beyond the surface.
Gabriel Sacks is Lead Manager of Aberdeen Asia Focus plc.
Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
[1] See, for example, US Department of State: “Strategic partnership agreement between the government of the United States of America and the government of the Democratic Republic of the Congo”, December 4 2025 – https://www.state.gov/strategic-partnership-agreement-between-the-government-of-the-united-states-of-america-and-the-government-of-the-democratic-republic-of-the-congo.
