Recessionary fears drove a sharp correction in mining stocks over summer, but analysts at Deutsche Bank reckon the sell-off was overdone.
Because of that, they think the recent fall has now created a “tactical” buying opportunity.
“While uncertainty and macro risks are high, we see scope for a tactical rebound on a six-month horizon,” said the analysts in a note to clients.
“The pervasive fear in the market is that we enter a 2015 type slowdown which saw negative China and global steel demand for several quarters.
“While we expect a deceleration in China steel demand in the year ahead (2% in 2020 from 5% in 2019) we think a 2015 style slowdown is an overly pessimistic scenario.
There was a downgrade for Antofagasta PLC (LON:ANTO), which was moved from ‘hold’ to ‘sell’ given that its shares have strongly outperformed the sector so far in 2019.
All of London’s major miners traded higher on Wednesday, with Anglo American the top riser, up 1.7% to 1,803p. BHP rose 0.4% to 1,772, while Fresnillo also added 0.4% to sit at 766p.
Even Antofagasta, the only miner to attract a 'sell' recommendation in the note, was up, rising 1% to 842.2p.