In the first episode of our ‘Value Added Insights’ series, Michael Maughan explains why the team is bullish on the resources sector following China’s recent fiscal stimulus, and highlights a number of mispriced stocks they are capitalising on.
September was an interesting month for markets, punctuated by financials giving up leadership to resources – the latter boosted by China stimulus and the coordinated approach to getting the economy growing again.
When it comes to the miners, we added Fortescue to our holdings, which also includes BHP and Rio Tinto, amid attractive valuations and what we think could have been peak negativity.
And while we captured the short-term bounce, the next goal is to determine the sustainability of the Chinese stimulus. That said, we’ve probably got a bit of time given the seasonal buying of iron ore into the end of the year and how severe the negativity was in the sector.
The oil market has also been interesting, given the market’s price expectations and moves by OPEC, whilst we’ve also been taking a closer look at a large-cap healthcare name.
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