The likes of Rio Tinto, BHP Billiton and Anglo American topped the FTSE 100, after the bank said that there are “signs of a rebound in activity” in China, the world’s largest consumer of commodities, while the sector is “delivering on cost cutting”.
A slowdown in demand for metals and minerals, followed by a subsequent fall in commodity prices, has hit miners hard over the past 18 months, with the larger firms drastically cutting costs and divesting non-core assets in an attempt to turn around their balance sheets.
“The sector has performed poorly in the last few years, down 50 per cent relative, to be currently at the same levels as at December 2008,” said the research.
“At the same time, commodity prices are double the December 2008 levels. We continue to be concerned about Chinese credit and fixed asset investment backdrop, but earnings of miners have already repriced lower by more than 60 per cent.”
JP Morgan’s analysts name Rio and BHP as the most attractive stocks in the sector, both of which were up over three per cent this afternoon.