02 May 2013 13:08 [Source: ICIS news]By Will Beacham
"The pension funds said, ‘They’re trying to devalue the dollar; what does that do to our investments? We must find a store of value – let’s use oil because it’s a well-used commodity, priced in dollars, and it will go up’."
The IMF said recently that 25% of some pension fund assets have been put into oil. Now, however, pension funds may change their strategy and withdraw from oil following Japan’s decision to support its currency and exporters via QE, said Hodges, who writes a blog for ICIS.
"One hopes that we won’t see a sudden collapse as that would be incredibly difficult for the chemical industry to handle. Just think about the fact that we’ve got 45-60 days of product tied up in our system. If that was devalued by half or three quarters what on earth would we do?"
The chemical industry must prepare: "Companies need to sit down and ask ‘What would we do if this happens? It’s not our base case but if there is a 10% chance of this happening then the Boy Scout motto is the right one ‘Be Prepared’."
Read Paul Hodges' Chemicals and the Economy blog
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