Credit Suisse backs mining stocks
Credit Suisse is advising investors to buy mining stocks, saying a sell-off on equity markets was overdone and that commodity prices are remaining strong.
Posted: Wednesday , 23 Jan 2008
LONDON (Reuters) -
Credit Suisse advised investors to buy mining stocks on Wednesday, saying a sell-off on equity markets was overdone and that commodity prices were remaining relatively strong.
"Recent history shows that the commodity markets are a much better indicator of global growth than the equity markets," a research note said.
"We think this sell-off is another false start and recommend investors buy the miners which have fallen on average 18 percent from their December highs." The note did not give recommendations for specific stocks.
The investment bank's earnings-momentum indicator has only fallen 1.5 percent in the last week while commodity prices are holding up, it added.
Copper prices have given up only 2 percent as inventories continue to fall on the London Metal Exchange. "This could be a sign that European and US consumers which have massively de-stocked are beginning to slowly return to the market."
Coal prices remain firm and the bank recently upgraded its expectations for a price increase in iron ore contract negotiations to 55 percent from 35 percent.
"Bad news is now fully priced in our view, and the longer commodity prices stay strong, the more likely we will see a significant bounce in the miners." (Reporting by Eric Onstad; Editing by Quentin Bryar) |
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