China Slowdown Will Weaken Commodity Shares

Morningstar equity analysts expect a structural change in demand growth from China as its economy matures and transitions toward less commodity-intensive industries

Daniel Rohr, CFA 12 October, 2017 | 2:26PM
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China iron ore mine

With China’s credit growth slowing, Morningstar equity analysts continue to expect mined commodity prices to fall materially and for share prices to follow. 

With few exceptions, we continue to see mined commodity and miner share prices as overvalued, propped up by Chinese stimulus. Iron ore’s relative buoyancy since early 2016 is emblematic of most industrial commodities. The steelmaking ingredient’s Indian summer continued into July and August.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alcoa Corp44.07 USD0.00
Alumina Ltd1.84 AUD0.00Rating
Anglo American PLC2,717.00 GBP0.00Rating
Bayer AG ADR12.54 USD0.00Rating
BHP Group PLC2,041.50 GBP0.00Rating
DuPont de Nemours Inc75.48 USD0.00Rating
Eldorado Gold Corp8.98 USD0.00
Glencore PLC351.90 GBP0.00Rating
Martin Marietta Materials Inc408.37 USD0.00Rating
Norsk Hydro ASA60.24 NOK0.00
Nutrien Ltd67.53 USD0.00Rating
Rio Tinto PLC4,578.50 GBP0.00Rating
Vulcan Materials Co191.37 USD0.00Rating

About Author

Daniel Rohr, CFA  is a senior equity analyst at Morningstar.