beautiful set of numbers to start friday..., page-51

According to a recent comment by Graham Birch, the manager of the $13 billion Blackrock BGF-World Mining Fund: “Mining shares are discounting a very, very sharp slowdown in world economic growth. It’s completely absurd. BHP Billiton is very attractive.’’
OK, Birch is a dedicated mining fund manager and he is paid to be bullish. However he reveals a very important point: the significant fall in some resource share prices, particularly the 50% falls in the mid-tier resource stocks such as OzMinerals (OZL) and Kagara (KZL), have already discounted a sharp slowing of Chinese growth and a global recession.
Interestingly, in the outlook statement, Xstrata commented that the zinc and nickel prices have reached the marginal costs of production and currently the prices of both metals are bottoming.
The global corporates are confirming that commodity demand is strong and the positive long-term fundamentals remain intact. I am more inclined to believe the corporates than the Manhattan desk view of resources. You can guarantee underperformance by selling resource stocks after a 30–50% share price correction. Consequently I urge investors to use this unprecedented weakness as a genuine investment opportunity.
Corporates are bullish
I expect the BHP Billiton result ($US15.5 billion) on August 18 will result in earnings and dividend upgrades and confirm the positive fundamentals for the sector at a time when the hedge funds are very short. Investors have just one week before BHP triggers the short covering rally.
My view remains that adding to high quality resource sector exposures as these discounted (shorted) entry points is a very low real risk proposition. I remain strongly of the view the commodity cycle won’t end with a sporting event.