Analysts at Liberum Capital have upgraded their rating for Chile-based miner Antofagasta PLC (LON:ANTO) to ‘hold’ from ‘sell’ as they say they would not now be short of copper equities.
In a sector note to clients, the Liberum analysts pointed out: “Copper prices have been weighed down by negative global growth sentiment, driven by the continuing trade war between the US and China and the weakness in global manufacturing purchasing managers indices (PMI).
“However the fundamentals in 2019 are more robust than other years with a slow year for mine supply and recycling.”
They added: “There is undoubtedly weakness in the global growth engine as evidenced by weakening yields, slowing trade and contracting manufacturing PMIs.
“The continuing trade war with the U.S. and China is part of the problem, but we are late in the business cycle and we do expect global growth to slow, increasing the likelihood of central bank action in the various regions.”
However, the analysts concluded: “Catalysts including spreading supply disruption in Zambia, further stimulus from China and a Fed rate cut, could result in a decent snap back in copper prices as the currently extended net short futures positioning reverses.”
The analysts also said that the do not believe the recent weakness in copper prices has harmed the chances of the juniors, such as Asiamet Resources PLC (LON:ARS) and SolGold plc (LON:SOLG), being acquired, given the strength of the majors balance sheets.