Miners were in the firing line again as a couple of brokers urged investors to banish any thoughts of buying the dip after the recent slide in share prices across the sector.
Liberum says iron ore and copper are its two least favoured metals, hence it is a seller of Rio Tinto, which it bluntly says has no positive equity story, and Antofagasta which facies a tricky operational and political situation.
If you have to buy a miner, it has to have exceptional value in the current market adds Liberum and among the big caps that means Glencore.
“It continues to benefit from the strategic missteps of its competitors exiting coal, choosing instead to take on the role of running down these assets. As DoJ investigation draws to a close, a new pool of potential investors emerges.”
Mid-cap miners are its only other buy recommendations with Emmerson, Shanta Gold, Trident Royalties and Ferro-Alloy Resources its favourites.
Deutsche Bank is also bearish on the sector, with target prices and earnings lowered across the board on a more bearish ex-China demand outlook.
“Factoring in the house view of a US recession next year, we have cut 2023 prices to below spot and consensus levels on expected short-term surpluses.
“Recovering demand in China will provide a counterbalance and, following the recent correction in metal prices, we see scope for a China-driven relief rally into Q4 before prices succumb to weaker global growth. An earlier recession presents the clear downside risk to this view.”
Anglo American is the main change in recommendation with a cut to’ hold’ and a target price of 3,500p from 3,900p.