To me it is a green light for China's exposed casualties of trade wars to come back into focus, namely copper. It is down 20% since this trade war saga started. It has been beaten up as traders quoted yield curve inversions suggesting recession risk around the corner. As Trump went all in threatening to impose sanctions on all $500 billion worth of imported goods, the market was worried what would happen if China retaliated with fiercer measures. Is China as irrational as Trump, hmm. It is all about strategy for them. Why would they when they have invested billions in initiatives like One Belt One Road, if not to keep growth stable and growing slowly?
Quality large cap stocks like Antofagasta, Kaz Minerals and Rio Tinto (RIO) , are down anywhere between 10%-20% since the summer started. Nothing has changed fundamentally. These companies have solid balance sheets and display the only growth in copper projects around the world, and dividend yields of 4%. But everyone is short and thinks China is about to collapse. Sod's law. Pain trade is higher. Seems like a great entry point to me.
OZL Price at posting:
$9.48 Sentiment: Buy Disclosure: Held
