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Goldman Sachs is betting on BHP Billiton Limited (ASX:BHP) to push the resources sector higher and has earmarked Westpac Banking Corporation (ASX:WBC) for weakness.
The global investment bank says BHP’s diverse asset base and low-cost operation will continue to deliver strong returns as Chinese commodity demand weakens – and has put a buy recommendation on the mining giant.
Goldman Sachs has put a sell recommendation on Westpac, claiming is its least preferred bank driven by valuation and its larger exposure to a structural decline in mortgage credit growth.
According to the note, momentum has started to reverse with mining valuations at ten-year lows compared to the banks.
While Goldman Sachs concedes both sectors face structural risks, the investment firm says with the banks at near highs there are more opportunities in the languishing mining sector.
BHP Billiton reported a net profit $4.1 billion in the first half of the 2013 financial year.
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