Charlotte de Kerpoisson:
Hello and welcome to this podcast by BNP Paribas Wealth Management. My name is Charlotte de Kerpoisson. Today I'm joined by Edmund Shing, Global Chief Investment Officer, to discuss his investment strategy for January 2026. Hello Edmund, Happy New Year.
Edmund Shing:
Hello Charlotte and to you too.
Charlotte de Kerpoisson:
2025 was an excellent year for commodity-related investments. Indeed, precious metals generated huge returns, while strategic industrial metals such as copper also posted record gains. This momentum in raw materials has continued into 2026, even though global oil prices have been sliding on the back of increased OPEC+ production. Last year, the average commodity gained more than 20% in US dollar terms, led by an impressive rally in precious metals. So Edmund, with gold up more than 60% over 2025 and silver up more than 130%, is there any potential left in 2026?
Edmund Shing:
I would say yes. But the first thing, of course, to say is don't expect 2025 to repeat again, because the 60% for gold and over 130% for silver were truly exceptional. Once-in-a-cycle gains, you don't expect to see that repeated. We've already had to raise our target price several times, both for gold and silver through the year, because the momentum, even though we were positive, the momentum that you've actually seen in the markets has been far more impressive than we had ever expected. So that's the starting point.
Do we expect further potential? Yes. But obviously much more limited. For instance, with gold, if you look at the drivers, central banks are still biased. They're still moving out of US dollar reserves into gold in terms of their monetary reserves. So that trend continues, despite the price going up. Secondly, investment demand from retail investors and from institutional investors has increased, particularly in Asia, but still has a long way to go, in my view. We have not seen a wholesale reweighting of investor portfolios towards commodities and in particular towards gold. It has started, but again, these holdings remain at relatively lower levels when you look at the long-term history. So that driver remains in place. And I think if you look at geopolitical volatility more broadly, we've obviously just seen the actions of the US administration in Venezuela. We now hear talk about Greenland. So geopolitical volatility remains very much alive and well. And that also underpins, I think, the demand for precious metals and in particular gold. Of course, if you consider silver separately, it is not only a monetary metal like gold, but also an industrial metal. And if we look at the industrial drivers for demand for silver, they continue to be very strong. We see continued strong growth from everything that's electronics and AI related, from the electrification of the global economy. And on the flip side, on the supply side, we don't see new mines opening to produce silver. Remember, 75% of the primary mine supply for silver comes from mines which only generate silver as a secondary by-product, which target gold, lead, zinc or copper primarily. So actually, you'll only get new mine supply in silver once producers decide to invest in new mines to produce copper, gold or zinc, for instance. That may happen, but it's not obvious at this point. So I would say, yes, we also see upside for silver. But again, given that we've moved very quickly to $80 an ounce, more or less, we think the upside will be much more limited. But through the year, there will be some further potential.
Charlotte de Kerpoisson:
In December, copper broke through $11,000 per tonne, so an all-time high. And recently, we've seen it reach $13,000, driven by technology-related demand and also short global supply. So, Edmund, can we still buy exposure to physical copper and to copper producers?
Edmund Shing:
I think we can, because I think those drivers remain very much in place. And most importantly, again, when it comes to the demand side, it's quite clear that demand is growing quite quickly. Electrification of the economy, electric vehicles, AI data centre demand, connection of renewable energy supply all requires a lot of copper and copper cabling. On top of that, you have growing demand from emerging markets, notably from India. So, when you add all of that up, on the demand side, growth will continue quite substantially for copper. On the other hand, then we look at supply. And again, I think it's very difficult to see new copper mines coming online or even being invested in until copper reaches a higher price, even than today, maybe more like $14,000 a tonne. So, at this point, copper producers are not really incentivised to increase production, but rather to maximize prices. And I think that will squeeze prices to the upside. I think that is good, both for the physical copper price and for the producers, even if the recent movement of copper has been quite outstanding. With copper up over 40% over 2025 in dollar terms we still do see limited, but further upside potential in 2026, both for the physical metal and for the producers.
Charlotte de Kerpoisson:
What other industrial metals offer good investment potential for 2026?
Edmund Shing:
Well, I think if you look more broadly at the industrial metal space, and I think this is something very important to say: that 2026 could be much more a year for industrial metals rather than precious metals. 2025 was the year of precious metals. I think 2026 will be much more the year of industrial metals, not only for copper, but also for aluminum, which actually is used very much as a substitute for copper in certain electrification uses. But also for tin, which is an everything electronic, computer related, and so, of course, benefits from continued electronics demand and particularly anything related to data centres. And on top of that, you even see nickel coming back. Now, nickel has been actually in a bear market for most of 2025, with prices falling due to oversupply. However, we are seeing demand growing, particularly from batteries. Again, nickel is used a lot in lithium-ion batteries. And on top of that, we have seen a reduction in the supply of nickel. So maybe some of the previous oversupply has been cleared out. And we saw the nickel price go up 17% just in the month of December. So it's actually going from a bear market, and it's transitioning to a new upward trend and positive momentum. So I would say look at aluminum, tin, and nickel. And I think that's why buying a fund of diversified industrial metals, including those three plus copper, makes a lot of sense today.
Charlotte de Kerpoisson:
During the last three months of 2025, we saw a rotation of stock market leadership in Europe and in the US. So moving away from the former technology “darlings”, including the Magnificent Seven, towards more value-oriented sectors, such as mining, industrials and financials. So Edmund, is this rotation from technology growth stocks towards value sustainable in the months ahead?
Edmund Shing:
Well, I think it is, Charlotte, because you have to remember the history. Technology has been certainly the leader, and US technology in particular, has been the leader of the global stock market for the last five plus years. So it's been a very long-term trend, and 2025 was clearly a sea change in that, where for the first time we saw the World ex-US stocks and the cyclical value sectors, as you've mentioned, like mining, industrials and financials, leading and performing far better than the technology stocks. So technology did fine, in dollar terms at least, but these cyclical sectors did far better. Do we expect that to continue this year? Yes, is the answer. I would say we still like financials, particularly in Europe. European banks, we think, have a lot more upside potential. If we look at industrials, we do like industrials, because we do think there'll be a gradual recovery in the world economy on the manufacturing side, which will certainly help. And, you know, investment in AI inevitably will help industrial companies, because that investment has to go somewhere. It's not just in technology, but when you build a data center, you have to build structures. And so there's a lot other than just the IT component that is stimulated. So I think that's good for industrials. And then, of course, for mining, well we've talked about the physical metals, clearly they're enjoying record profit margins, and that should continue to drive earnings growth for that sector too. So, yes, I do see this rotation towards more cyclical and value sectors continuing this year.
Charlotte de Kerpoisson:
What other stock market segments are benefitting from this rotation out of large-cap technology, Edmund?
Edmund Shing:
Well, if you consider the large cap technology has been driving both US outperformance and US dollar performance, and that we've seen a reversal in both of these, we've seen underperformance in 2025 of US stock markets and underperformance of the dollar, I think those trends continue, which clearly continues to favour World ex-US. Now, where ex-US in the world should we look? Well, first of all, emerging markets. I think China, Latin America are two areas we very much like for different reasons. If you want to buy cheaper, more exciting, innovative technology, particularly physical AI, China is a very good place to be. Still, Taiwan and Korea are interesting places for the same reasons. But Latin America, again, with its commodity-heavy exposure and cheap valuation, I think is also very attractive. So Brazil and Mexico, for instance. Other than the emerging markets, I would also point to Europe, both the eurozone, again, we've talked about European banks. I think there's one segment we really like, but we also like industrials and construction sectors in Europe. And finally, the UK. The UK, because it has a lot of mining, pharma and banks, three sectors we really like. It is still a cheap market. It has shown good momentum. And the FTSE 100 index in the UK has only recently just broken through the psychologically important 10,000-point barrier for the first time ever. So I think we are seeing good momentum, even in the UK, which I think is something that clients should be aware of.
Charlotte de Kerpoisson:
Thank you very much, Edmund. And thank you to our audience for following this podcast. Please like, share and subscribe to our weekly podcasts and visit our website for our investment themes and research. Goodbye.