Anglo leads market as outlook powers rerating

[miningmx.com] – ANGLO American kicked off 2013 where it ended the previous year, in the throes of a rerating based on an improved demand outlook, especially from China.

The JSE bellwether gained seven percent on the first day of trade of 2013, equal to some R18.22 per share valuing the company at R386bn. The increase in shares today means that the share has gained 13,2% since December 4.

Interest in Anglo American was following “… iron ore and Rio [Tinto], and the generally more bullish news from China (for now),” said Des Kilalea, an analyst for RBC Capital Markets in London.

He added there was an expectation that Anglo would cut production at Anglo American Platinum (Amplats), the 77%-owned listed subsidiary. Shares in Amplats ended 4.41% and mirrored gains in other platinum shares.

There were also significant gains for BHP Billiton and South Africa’s principal gold stocks – AngloGold Ashanti (+2.7%) and Gold Fields (+2.29%).

In London, Rio Tinto was nearly 5% stronger after the price of iron ore continued its surge, partly based on restocking by Chinese steel producers.

The sentiment from China has been more promising generally. In his New Year’s Eve speech, president Hu Jintao said that China would “… step up efforts to promote strong, sustainable and balanced growth in the world economy”.

The price of iron ore sank to $90/t in September but has been in recovery since then piercing $145/t lately. According to UK stockbroker SP Angel, prices would be supportive of about $110/t to $120/t for “much of the year”.

“As ever all that will matter with these stocks is the direction of the commodity prices,” said Sasha Neryshkine, an analyst for Vestact, the Johannesburg stockbroker. “Chinese growth fears, although we always thought unfounded, have not materialised. Globally the economy looks settled and in better shape than at this time last year,” he said.

The improvement in commodity stocks took the JSE to a fresh record by midday, an outcome related to the deal to avert the US fiscal cliff, according to BDLive.

Citing Vunani Private Clients global market analyst, Kuziva Muganiwa, the website reported: “The aversion of the fiscal cliff has been very good for all emerging markets, it has increased investors’ risk appetite”.