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A two-tier global mining market?

Author: public date&time:2010-5-11 8:43:51 Click Count:

A two-tier global mining market?

Mining stocks have been battered for a fortnight, but Chinese mining stocks have powered on and up, and now comprise nearly a quarter of the world's top 100 miners, by value.

Since 3 June 2009, intra-day aberrations aside, overall prices for global mining stocks have sustained an overall downward battering, but in the detail, Chinese miners have continued to power upwards. Dollar metal prices have been having a tough time of it over the past fortnight, indicating that it could be that different sets of sentiment, and perhaps even fundamentals, apply to economic enterprises in China, the epicenter of global economic growth, and the rest of the world.

It may be that the significant power drives demonstrated by the prices of dozens of Chinese mining stocks have taken back seat, on "front pages", to the 5 June announcementby transnational mining group Rio Tinto that it was abandoning a near-USD 20bn deal with smaller rival Chinalco, opting instead for a rights issue to raise the equivalent of USD 15.2bn, and agreeinga USD 116bn joint venture with BHP Billiton over the two companies' West Australian iron ore assets.

In the background, raw materials suppliers of kinds, not least those in China, such as State-owned Chinalco, continued to benefit from the country's USD 585bn stimulus package. Not only do Chinese mining companies now occupy nearly a quarter of the positions among the world's top 100 miners, by value, but favoured individual mining stocks often specialise in areas where counterparts outside of China continue to bleed.

At the same time, it may be noted that general sentiment in overall Chinese stock markets currently carries the status of buoyant; the broad-based CSI 300 traded today at 12-month highs, and the Shanghai Composite nearly so. These performances have few rivals in the world, with the India Nifty ranking as the closest, trading within 10% of highs

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