Here is the opening of this interesting article from Bloomberg:

Mark Mobius is piling into commodity stocks in China, saying that a rebound in raw-material markets is only getting started after prices sank too far and that gains may be extreme.

Templeton Emerging Markets Group will add more raw-material stocks from Asia’s top economy, according to Mobius, executive chairman of the group, who’s been investing in emerging markets for more than four decades. Many of them will be good holdings for the long term, he said in an e-mail interview, without identifying particular companies.

China’s commodity producers, which were the worst mainland equity investments over almost a decade, have led this year’s rebound as China boosted stimulus and local investors swarmed into the nation’s futures markets, with bets on everything from steel bars to cotton. The Bloomberg Commodity Index rallied for a second month in April, and assessments are stacking up that the worst of the rout is now over, including from industry veteran Tom Albanese, a former head of Rio Tinto Group.

‘Down Too Far’

“We have already seen how both commodity prices and the commodity stock prices went down too far, beyond realistic assessments,” Mobius said. “We can now expect movement on the upside to be extreme in percentage terms. If there is a move down, there is a good chance that we would increase.”

David Fuller's view

Fuller Treacy Money concurs with this view and I do not think one needs to select shares in China to participate. 

There are plenty of recovering commodity shares trading in London and also the USA, as subscribers may have noticed from Eoin’s frequent reviews.  These offer speculative appeal and more, if one considers the sector leaders with substantial dividend yields.

Personally, I have always preferred the actual commodities to commodity shares.  The latter are often wasting assets, at least among miners and oil or gas companies.  Additionally, commodity companies can suffer from management problems, government expropriation or over taxation, and as Mark Twain said: a mine is “a hole in the ground with a liar at the top”.  However, a mining companies’ misfortunes will often reduce supply, which supports the actual commodity price. 

I am currently hoping for some further pullback in silver, platinum and gold, in which case I will begin to re-establish long positions, particularly if short-term stochastic indicators turn from overbought to oversold.  I may also purchase a few other commodity longs, especially if I can buy on pullbacks.  Royal Dutch Shell (RDSB LN) remains my biggest long-term commodity investment by far and currently yields 7.38%, according to Bloomberg.  I will reinvest more of its dividends when we see a right-hand base formation extension phase, which could occur during the current stock market pullback.  I also have a medium-term trading position in the BlackRock World Mining Trust (BRWM LN) which I have been building this year.  I feel it is safer than individual mining shares and it also trades at a current discount to NAV of 15.55%.