Mining shares offer some value after the recent sell-off, according to the Royal Bank of Canada (TSX:RY), but only if investors choose carefully.
Earlier this year, mining sector shares rose so fast on the back of China reopening enthusiasm they became more expensive than at any time over the past decade, said the bank.
Now, after a 15% drop post-SVB/Credit Suisse the situation is more balanced, though bond markets are pointing to an economic slowdown, which is never a good time for mining.
RBC sees the banking crisis impacting the sector in three ways: Setting up the conditions for a weaker dollar; helping Chinese stimulus measures and improving the perception that liquidity will be supported.
But ultimately if it means economic activity does slow down, miners are unlikely to escape says the bank, hence the need to pick carefully.
Of the UK-listed majors, Glencore (540p target) is RBC’s only 'outperform' rating, though it is more optimistic among the smaller payers.
Royalty specialist Ecora (tp 260p), gold miner Centamin (130p), silver specialist Hochschild (100p) and central Europe-focused precious metals group Adriatic (235p) are also rated as outperforms.