As the Chinese government continues to implement measures to deflate the asset bubble that has developed in its property and stock market, we expect to see commodity prices go lower.

While the long-term outlook for most hard commodities looks very promising, the short-term impact of the Chinese austerity measures should not be underestimated.

Much of the rise in commodities last year was down to the Chinese government stock piling. While world economic growth continues to strengthen, it is still insufficient to justify some of the prices we have seen in oil, copper and iron ore.

For this reason we have decided to go under-weight on commodities across the summer and have cut our exposures in half.

We will seek to buy back in later this year once the demand from either China or the rest of the world picks up.