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The surge in Oil and Commodities create opportunities for South African Investors

The surge in Oil and Commodities create opportunities for South African Investors

With the ongoing Russo-Ukrainian War entering its fourth week, institutional investors directed their money into commodities

This has led to two-week highs in the JSE All Share Indices, which broke the 76 000 barrier on 8 March 2022.

The war-affected oil and Natural Gas prices, with Russia providing over 40% of oil and gas to Europe. The United States has banned the import of Russian oil, which has only added to the pressure on the oil price, at one point hitting a mark of $120 a barrel.

But where there is uncertainty, there is also opportunity

“A volatile stock market isn’t always a bad thing,” says Jack Edwards, the South African Marketing Manager for international trading platform CAPEX.com. “Our indicators show ample opportunities for the astute investor to cash in on the volatility.”

Of course, increased volatility also increases risk. “Always remember that CFD Trading carries risk. The more aware you are of those risks, the more you learn about the trading environment, the more you can place guardrails in place to mitigate risks,” Edwards continues.

A chief concern for South Africans remains the oil price, with the Central Energy Fund predicting an increase in inland 95 unleaded of R2.27 by April. This significant increase will have rolling effects on agriculture, transport, and ultimately food prices, putting pressure on the local inflation rate, which is already edging the Reserve Bank’s upper limit of 6%.

Andrei Melnichenko, a Russian Oligarch who made his money in oil and fertilizer, has warned of a global food crisis as farmers across the US and EU are priced out of the fertilizer market. The Russian Federation is a large producer and exporter of fertilizer, producing about 13% of the world’s supply. With Russia under sanctions, these exports have stopped.

"The events in Ukraine are truly tragic. We urgently need peace," Melnichenko, 50, Russian but was born in Belarus and has a Ukrainian mother, stated. He has been placed on the sanctions list, and all his money and assets have been frozen.

The United Nations food agency has predicted a rapid increase of food prices of about 20%, on a global population already under strain after two years of lockdown.

“The news seems bleak,” says Edwards of CAPEX.com. “In times such as these, we must look for silver linings. We need to do the most with our money. Keeping it in a savings account is as bad as hiding it under your bed. Inflation will eat into your money, making it worth less and less as each month goes by.”

Is there anything we can do?

“We need to educate ourselves,” Edwards continues. “Trading platforms like CAPEX.com don’t only give South African investors access to an array of options to international stocks to trade, but also provides an excellent trading academy – CAPEX Academy - which is free to use.

“When trading with CAPEX.com, there are no monthly subscription costs, and you can open a Demo Investor Account to implement what you’re learning in our CAPEX Academy.

“It’s vital for South Africans to educate themselves as we enter a period of uncertainty. CFD trading can present an excellent opportunity,” he concludes.

Any South African over the age of 18 can open a free CAPEX.com account and requires a deposit of only $50 (approx. R750) to begin trading on a live account. Visit https://za.capex.com/en to open your account today.

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