MINING shares leapt in Johannesburg following Tuesday’s news of China stimulus efforts with Anglo American leading the way.
The UK miner gained 7.68%, while shares its 71%-owned subsidiary Kumba Iron Ore were 10.2% higher. Shares didn’t trade in Johannesburg on September 24 owing to a national holiday.
According to Bloomberg News, however, China’s economic stimulus will not bring the sustained benefit mining companies need. European miners are heading for their deepest third-quarter slump since 2021, the newswire said.
“The announcements will help with the relief as investor confidence prompts upwards, however the new stimulus is unlikely to significantly boost the economic growth in the mainland,” said Leonardo Pellandini, an equity strategist at Bank Julius Baer.
He told Bloomberg News: “We don’t see as of yet a sustainable recovery for Chinese exposed miners and energy companies within Europe.”
Iron ore has been among the worst performing commodities this year, sliding more than 8% in the third quarter as China’s slowdown has hurt demand, said Bloomberg News. At the same time, major low-cost miners in Australia and Brazil have been boosting supplies, driving the market into a surplus, it said.
“The medium-term outlook for commodity stocks remains bleak,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.
This week’s measures from China showed authorities are taking seriously warnings the country risks missing its growth target of around 5% this year, said Bloomberg News. But doubts remain over how effective the steps will be in easing longer-term deflationary pressures and the woes across real estate, it said.
