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A Commodities Rebound Is Accelerating at China’s Doorstop

  • Growth in Southeast Asia and India to add to demand: BHP CEO
  • Time to accumulate best mining companies, Morgan Stanley’s Lim

China may be slowing, but a commodities rebound is under way and the world’s biggest miner knows where the next growth story is building -- emerging economies in Southeast Asia.

Combined gross domestic product in the ASEAN-5 nations -- Indonesia, Thailand, Malaysia, the Philippines and Vietnam -- will rise about a third to $3 trillion in the five years to 2020, fueling commodities-intensive infrastructure projects. Momentum like this across Asia will help maintain and increase commodity demand, BHP Billiton Ltd.’s Chief Executive Officer Andrew Mackenzie said this week.

“People have been so used to believing that commodities was a China story, and that with China decelerating where’s the growth going to come from?” Nathan Lim, Sydney-based head of research for Morgan Stanley’s wealth management division, said by phone. “That incremental demand is coming from the emerging markets, and that’s the part people don’t have their head around.”

Thailand is considering more than $50 billion of infrastructure spending, while Vietnam has begun major projects including a $10 billion rail modernization, Indonesia is seeking to accelerate road to ports programs and Philippine President Rodrigo Duterte has promised new railroads and airport runways. These markets are “back on their growth path after a period of under-performance,” according to Lim.

Financial Crisis

Commodities surged the most in the first half since the...