Gold has a good run of late, helped along by positive comments from some in the investment banking community. Morgan Stanley, for instance, had a buy note on gold for many months, but it now looks like they are having second thoughts. They’ve closed their September call on the shiny precious metal – and think that commodity investors might want to look elsewhere. Cynics might wonder why MS has taken its profits and run especially as the bank’s analysts think that 2019 might be the year of a weaker USD dollar and lower US real rates (conditions that should otherwise be good for gold).  According to Morgan Stanley,

“Gold has rallied significantly over the last five months, moving close to a $1350 level that it has repeatedly failed to break. Sentiment has also risen sharply as the market has embraced a ‘Goldilocks’ narrative (no pun intended). Gold has been boosted by hopes of a dovish Fed. But with markets now priced for cuts through the end of 2020, we question how much further this catalyst can help”.

Might Copper be an alternative? The MS analysts reckon so – they think it is worth watching the industrial metal especially as gold no longer qualifies as a ‘top trade’. “In commodities, copper now looks better supported by our commodity team’s fundamental views.”

If industrial metals like copper are in pole position, that might be excellent news for one country – Kazakhstan. This former Soviet state has been flagged by analysts at Renaissance Capital as one to watch – alongside Georgia which was highlighted last week by fund analysts at Numis. Apparently, they rate Kazakhstan as their top macro story in the CIS/regional space, on a par with Georgia.

“We expect Kazakhstan to deliver the highest GDP growth among the regional oil producers (2.9%/3.3% in 2019/2020 at $65/60/bl oil) supported by the continued expansion in consumer and investment demand (3%-plus and 4% growth, respectively). “

The catalyst for a major bounce-back might be the impending privatization of seven major state enterprises in 2019-2020.

“This year, the authorities plan to IPO Air Astana, Samruk-Energy, Kazakhtelecom, and sell another 10% stake in Kazatomprom. We believe the recent change of government will provide a stronger incentive for new cabinet members to deliver on the reform process, which we think will strengthen the country’s institutions. A lower inflation environment and revitalized banking sector could encourage credit growth and development of the local bond market – though we do not forecast the Kazakh policy rate to be below the Russian policy in the next few years.”

The only slight fly in the ointment might be the state’s northern neighbor, which remains very unloved – and occasionally belligerent. Sanctions against Russia could continue to impact the local currency, the tenge but remember that only 4% of Kazakhstan’s GDP is exposed to Russian markets, according to Renaissance.