Kieron Hodgson, mining analyst at Panmure Gordon told Portfolio Adviser that for investors to regain confidence in the sector, some kind of stability is needed and, for companies like Anglo and Glencore, a sense that they will be able to survive another leg down from a balance sheet perspective.
“The problem right now is that there are just too many unknowns for the sector. They are all known unknowns, but it is hard to know where it will all end up,” he said.
Indeed, one can almost liken the sector to a passenger in an out-of-control car; they can put their seatbelt on and brace for impact as much as possible, but exactly where and in what state the car will stop is largely out of their control.
Exactly what the road ahead looks like is anyone’s guess but many investors hope the next few weeks will provide some clarity on the macro side, with the ECB and then the Fed meeting on rates. But, even if the Fed does announce a rate hike, as is largely expected, the longer term implications of its policies are only going to be seen in 12 to 18 months. And, as for the likely path of Chinese economy, that is currently undergoing an exceptionally complex transition that remains an equally difficult course to plot.
Which leads one to believe that when it comes to mining goodies, perhaps it would be better to wait for the Christmas sales.
