Commodities in Japan could explode within a couple of years, if big banks, institutional investors and life insurance companies there decide to jump into an asset class they’ve long avoided as risky business. Already, Reuters reports, investment habits are changing as the bucks in investment trust funds linked to commodities has surged from an estimated $70 million at the end of 2004 when they made their debut to around $1 billion today. “More and more institutional investors are regarding commodities as a legitimate asset class, while in the past such recognition was very low,” Naohiro Niimura of Mizuho Corporate Bank told Reuters, adding that he expects in two to three years, commodities will grab at least $17 billion. So far, however, the pace is slow. “The boom really hasn’t started,” says one investment bank official, “but some major institutions are making room to shift part of their assets” into commodities. Many large investors, reports Reuters, assume a wait-and-see attitude. “If one starts to invest, then others will follow and the boom could spread quite quickly,” another banker told Reuters.
