Active Stocks
Wed Jun 19 2024 15:54:35
  1. HDFC Bank share price
  2. 1,658.00 3.06%
  1. Tata Steel share price
  2. 180.05 -0.61%
  1. State Bank Of India share price
  2. 852.60 0.95%
  1. ITC share price
  2. 423.70 -1.19%
  1. ICICI Bank share price
  2. 1,144.75 1.93%
Business News/ Markets / Stock Markets/  Chinese Investors Snap Up Copper, Gold Stocks to Drive 10% Gains
BackBack

Chinese Investors Snap Up Copper, Gold Stocks to Drive 10% Gains

Chinese investors are snapping up stocks tied to high-flying metals from copper to gold, aiding an onshore market facing an uphill battle to cement a nascent rebound.

Chinese Investors Snap Up Copper, Gold Stocks to Drive 10% GainsPremium
Chinese Investors Snap Up Copper, Gold Stocks to Drive 10% Gains

(Bloomberg) -- Chinese investors are snapping up stocks tied to high-flying metals from copper to gold, aiding an onshore market facing an uphill battle to cement a nascent rebound.

A gauge tracking resources firms listed in Shanghai and Shenzhen has gained 10% in the past month, becoming the best sub-index of the CSI 300 benchmark. Zijin Mining Group Co., a major gold and copper producer, and Shandong Gold Mining Co. have led the rally and both gained over 20% in this period. 

Driving the demand for producers of base metals like copper were signs of a recovering industrial sector in China, a domestic supply squeeze and expectations for global interest rates to drop. While gold is another beneficiary of monetary easing, the fervor for the precious metal also highlights Chinese investors’ hunger for yield as the country’s property woes deepen and returns on bank deposits dwindle.  

Those factors “are leading to bullish views on copper price and stocks" including Zijin Mining and CMOC Group Ltd., Morgan Stanley analysts including Rachel Zhang wrote in a note. Similarly, aluminum producers such as Aluminum Corp. of China Ltd., and China Hongqiao Group Ltd. may continue enjoying high margins in the medium term due to supply tightness, they wrote.

The sector’s stock rally has coincided with a commodities bull run that has sent gold to new records and copper toward a 15-month high. It’s one of the few remaining tailwinds behind China’s local equities that have started languishing again after two months of gains. 

CSI 300, which is dominated by state-run, old-economy stocks from liquor makers to banks and industrial firms, has risen 2.2% this year and remains one of the world’s worst performing major indexes. A gauge of Chinese firms listed in Hong Kong, which also features some of the nation’s most innovative technology companies, is up 4.3%.

READ: Commodities Are Entering Fresh Cyclical Upswing, Macquarie Says

To some observers, however, the rally in metal stocks is already looking a bit bubbly. 

“It remains unclear whether China’s economic recovery is solid enough," said Shen Meng, director at Chanson & Co. in Beijing. “The recent sharp gains were also driven by hot money, whose real motivation is seeking immediate returns." 

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

3.6 Crore Indians visited in a single day choosing us as India's undisputed platform for General Election Results. Explore the latest updates here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 11 Apr 2024, 05:02 AM IST
Next Story footLogo
Recommended For You
GENIE RECOMMENDS

Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

Let’s get started