JPMorgan has turned bullish on mining stocks, naming London-listed giants Rio Tinto, Antofagasta and Fresnillo among its top picks as it upgraded the global sector to 'overweight' for the first time in over a year.
The bank’s equity strategists said they expect a rebound in metals prices and mining shares in the coming months, after a long stretch of underperformance.
Mining stocks have lagged the wider European market by around 50% since the start of last year, and by 20% against underlying metal prices this year alone.
The team now sees a “V-shaped” recovery kicking off in late March, fuelled by policy support in China and rising demand for copper, aluminium and gold.
JPMorgan’s commodities unit expects copper to reach $11,500 a tonne by the second quarter of next year.
Rio Tinto, which has significant exposure to copper and iron ore, is the bank’s preferred name in the UK market, with a price target of £59.20.
Chile-focused copper producer Antofagasta and gold and silver miner Fresnillo also made the shortlist. Both trade in London and have long been considered bellwethers for sentiment in the metals space.
The bank said investors should look for companies with strong copper, aluminium or gold positions, or those that may attract strategic interest due to their assets.
It also noted growing investor interest in the sector’s lagging valuations, which have yet to catch up with the recent strength in commodity prices.
Rio's shares were up 2.3% in morning trading at 4,865p, Fresnillion was up 2% and Antofagasta was ahead 1.6%.