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Oil price scaremongering

Reports inundating the press on soaring fuel prices are creating unnecessary angst and fears amongst investors, an expert told the AAP.

Platinum Asset Management Ltd managing director Kerr Neilson said sensational stories on oil were making fund advisors “mesmerised”.

“Everyone is worried about oil”, Mr Neilson told at an investment conference in Sydney.

“We tend to focus on the current hot topic – which for the moment is, say, oil – having previously stressed about agricultural prices, credit default swaps, bank solvency, whether there would be economic convergence.”

The crude oil price reached a record $US139.12 per barrel last Friday.

However, he said the undue focus on oil prices would result in a limited view on the market, constricting investment.

“Peripheral vision is very blurred as we face the pressures of immediate gratification and the apparent wisdom to stay with the in-crowd,” he said.

Mr Neilson predicted the next big market issue would be not energy or agriculture, but inflation and an appropriate risk valuation.

“We are exploring and finding interesting opportunities in all manner of areas and they exclude energy and resources, except for pulp and paper.”

In the infrastructure market, he said, investments in companies like Siemens and Bombardier, the world’s biggest rail infrastructure supplier, would be worth considering.

In the meantime, with petrol prices rising above $1.60 a litre, the median expected inflation level has increased to 5.9 per cent in June, the highest in 15 years.

According to the monthly survey conducted by the Melbourne Institute (MI), the proportion of consumers expecting inflation to fall reached its lowest point since June 2000.

MI research fellow Dr Sam Tsiaplias said contributing factors to the increasing uncertainty regarding inflationary expectations seemed to conflict with economic data, with March GDP growth and rising crude oil prices countered by soft April credit and retail trade figures. 

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