For global mining stocks the bear is dead?

20 April 2009 | 06:00 Code : 19013 Geoscience events
In a note to clients on Friday, an Australian resources analyst was forthrigh...

In a note to clients on Friday, an Australian resources analyst was forthright: "Forget the bear market; that has been washed out of the system. The rally over the past two weeks has escalated to become a boom in the resource stocks."How else can you view the movements of stocks that were absolute dogs a month ago, when they have performed like they have since then? A month ago an advisor told me the private client market was dead. Well, they were famous last words. The private client market is back as a force and the hunger for trading profits is ravenous".The 100 "hottest" mining stocks have "bounced" from stock price lows, mostly seen during November 2008, by a monumental 345%, on average, measured on a weighted basis. At the same time, it should be pointed out that this selection of stocks is, on average, 65% below highs, seen earlier during 2008.These numbers appear to indicate both that mining stocks were taken into completely overheated territory during 2008, and, equally, were brutally sold down to way below any kind of "fair" value, however individual investors choose to define that. The world’s biggest 100 mining companies, measured by value, have bounced by just over 100%, on average, and lead the world’s attempted stock market recovery.The MSCI Barra dollar world equities index, a very broad benchmark, has advanced by a modest 28% from its recent multi-year lows; the dollar index for emerging market equities has recovered by 45%, so far. Among country stock markets, the Micex Russia shows the sharpest recovery, from an insanely oversold level, followed by the CSI 300, which measures the weighted performance of hundreds of stocks listed in China.The surge of investment flows into Chinese and Russian listed stocks has also benefited mining stocks; VorkutauGol, a coal miner, has bounced by more than 600% from its lows; JSC Polymetal, a silver-gold miner, by 548%, while Zhaojin, a Chinese gold miner, has advanced by more than 400%. Among the world’s 100 biggest mining stocks, there have been strong recent contributions from stocks such as Sichuan Hongda, Shanxi Lu’an, Shanxi Xishan, SDIC Xinji, Jiangxi Copper, Yunnan Copper, and Tongling.

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