Investors in China have found an unlikely new hiding place from the chaos engulfing financial markets, reported Caixin.
The price of steel reinforcement bar, the somewhat unglamorous but ubiquitous commodity used to strengthen concrete, has risen almost 5% over the past month in Shanghai. Over the same period, gold — the traditional haven amid turmoil — has dropped more than 5% as investors sell to cover losses in other markets.
Rebar’s unexpected ascent as a financial sanctuary reflects Chinese investors betting that Beijing will embark on a massive bout of stimulus to help prop up the economy in the aftermath of the coronavirus, fueling demand for raw materials used in construction.
“We are calling rebar, ‘rebar gold’ these days, as it has became a haven asset during this global crisis,” said Wu Yijie, an analyst at Shanghai Dalu Futures. “We believe the Chinese government will greatly bolster infrastructure spending as they did post-SARS to boost domestic consumption.”