What triggers are MM looking for to buy mining shares?

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Question asked 18/08/2023

What triggers are MM looking for to buy mining shares?

Dear James and Team, From what I understand the slow down and lack of big stimulus in China is having a negative impact on all our resources stocks. My guess / hope is that this will eventually turn around and demand will pick up leading to our resources coming back in demand. So my question, what is the trigger that MM is looking for to increase exposure to the resources market? Or is based more on stock specific issues (i.e. BHP at $40)? When you do buy back in would you look at stocks like AKE, IGO or PLS? Regards, Charles

Answer

Hi Charles,

We covered some your question in our What Matters Today Report on Tuesday.

Understandable nerves around Chinas struggling economy has weighed on shares and in particular the miners this week. At MM we still regard Chinas slow but focused approach to stimulate their economy as an opportunity to accumulate the Resources Sector into weakness, however the PBOC (Peoples Bank of China) has already cut rates twice since June which we believe makes their intent very clear.

At this stage its all about risk/reward hence our previously mentioned levels to buy stocks such as BHP ~$40 but we could easily find ourselves paying higher levels if China plays a card which we perceive to be decisive, one stock that’s been in our Hitlist for months is South32 (S32). We’re still not huge fans of pure lithium plays for ESG exposure but into further weakness we might consider IGO or PLS – MM Resources into FY24 Webinar

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South32 Ltd (S32)

LAST UPDATED 17/08/2023 16:34

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