Sector Update: Metals & Mining
Note: This is a daily stock update and the information stands true as of 09/09/24, 09:00 CEST.
Sector Update:
Metals and Mining is the worst performer sector YTD with a 19% drop.
The underperformance is notably due to the sharp correction in prices for most base metals and especially Iron Ore and Copper. This drop is itself linked to the Chinese slowdown and the absence of recovery at this stage.
Our analyst highlights that the correction in price for Copper and Iron Ore is actually welcome as prices were unsustainable - as he mentioned several times in the past.
Furthermore, in current macro-economic context, we believe any resumption of M&A is unlikely which also does not help on the sector perception.
Yet, we believe it may be time to buy some names on a selective basis.
First we like Glencore, which is very diversified and while it has a substantial copper exposure, it has no iron ore assets. Furthermore, its trading activity usually provides a cushion when volatility on base metals increases.
Our analyst also likes Norsk Hydro and Bolliden which are not exposed to China and in terms of end markets Zinc and Aluminium are metals you should seek exposure to. On the back of our numbers and target prices (which he deems conservative), the sector offers a 40% upside, the highest in years.
Expert Opinion:
The safe option is, of course, to wait until we actually see a recovery, notably in China. Yet according to our analyst, the risk reward profile is now favorable and I like the gutsy contrarian call.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach our to us at sales@alphavalue.eu
Sector Update:
Metals and Mining is the worst performer sector YTD with a 19% drop.
The underperformance is notably due to the sharp correction in prices for most base metals and especially Iron Ore and Copper. This drop is itself linked to the Chinese slowdown and the absence of recovery at this stage.
Our analyst highlights that the correction in price for Copper and Iron Ore is actually welcome as prices were unsustainable - as he mentioned several times in the past.
Furthermore, in current macro-economic context, we believe any resumption of M&A is unlikely which also does not help on the sector perception.
Yet, we believe it may be time to buy some names on a selective basis.
First we like Glencore, which is very diversified and while it has a substantial copper exposure, it has no iron ore assets. Furthermore, its trading activity usually provides a cushion when volatility on base metals increases.
Our analyst also likes Norsk Hydro and Bolliden which are not exposed to China and in terms of end markets Zinc and Aluminium are metals you should seek exposure to. On the back of our numbers and target prices (which he deems conservative), the sector offers a 40% upside, the highest in years.
Expert Opinion:
The safe option is, of course, to wait until we actually see a recovery, notably in China. Yet according to our analyst, the risk reward profile is now favorable and I like the gutsy contrarian call.
For daily updates, subscribe to our newsletter and for detailed daily updates, reach our to us at sales@alphavalue.eu
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