Energy Stocks Are At Bargain Levels With Demand Expected To Pick Up In 2013, Especially In Emerging Economies

Wednesday, August 08, 2012 07:08
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Energy Stocks Are At Bargain Levels With Demand Expected To Pick Up In 2013, Especially In Emerging Economies

Tags: energy | investment strategies | markets

Returns on energy stocks have returned 54% more than any other industry in the Asia Pacific region over the past 10 years. But now, they’re trading around 22% below their historic average, offering the possibility of high returns for long-term investors.

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Household demand in China and India from growing economies is also increasing consumption of electricity. Global demand for oil is expected to reach unprecedented levels at 89.9 million barrels per day during 2012.
 
The sector is volatile but offers high returns if investors are willing to hold on for longer periods. Even with the volatility in the sector, volatility in Asia is much greater than volatility in America.
 
But investors are concerned that the recent slowdown in China’s economy and of other BRIC countries will hamper energy returns. These emerging economies will encapsulate all the growth in demand for oil. Analysts say the sector is cheap and has stabilized. Oil companies have steady cash flow and hefty margins.
 
China alone will be responsible for 30% of the growth in global demand next year along with India and Indonesia.

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