London-listed Miners faced a blow on Friday as China’s latest attempts to prop up its struggling economy underwhelmed.
Copper firm Antofagasta PLC (LSE:ANTO) dropped 4.9% over the course of the morning, as Rio Tinto PLC, Anglo American PLC (LSE:AAL) and Glencore PLC (LSE:GLEN) also sat among the FTSE 100’s losers.
China’s Minister of Finance Lan Fo’an on Friday unveiled a 10 trillion yuan plan to refinance local government debt, which he said would cut hidden debt from 14.3 to 2.3 trillion yuan by 2028.
This included a six trillion yuan uplift on local governments’ debt ceilings, alongside the issue of four trillion yuan in special bonds.
AJ Bell analyst Russ Mould noted the latest stimulus measures followed a “hectic week” for mining firms, after volatility to commodities after Donald Trump’s US election win.
“The risks to China from a second Trump presidency are now overshadowing efforts to get the economy moving,” he said.
“The question on investors’ lips will be whether this encourages Beijing to unveil a bolder package of measures.”
XTB analyst Kathleen Brooks warned the measures could mark the last since China began stimulus efforts in September.
“The problem with China’s [latest] stimulus measures is that they are not stimulus,” she said, “they are essentially a debt swap to shore up local government’s finances”.
“Traders do not see these measures as boosting consumption, and instead they are designed to stop a financial crisis domestically in China.”
While the debt swaps were said to allow savings of 600 billion yuan annually to be diverted for investment, Brooks argued it was “unclear” how this would happen given the “unwinding of the property bubble is ongoing”.