The world's top 100 mining stocks - a hugely mixed bag

Some pointers from stock price movements noted in the world’s 100 most valuable mining stocks (with tables).

JOHANNESBURG - 

Since around mid-May 2008, the world's top 100 mining stocks, measured by value, have lost two-thirds of their market value, measured on a weighted basis. This is equal to a contraction of USD 1.7 trillion. By now, reasons for the fall, from the global financial markets crisis, to chilled to frozen debt markets, and a slowing world economy, are as well talked about as climate change.

At this juncture, the world's 100 biggest mining stocks carry an aggregated market value of USD 771bn (with nearly USD 400bn contributed by the top ten), a respectable figure by any count. More interesting, perhaps, is that the weighted average bounce in stock prices from bottoms (which may yet form new ones) is 35%. As such, this grouping of 100 mining stocks outranks practically every other major global equities subsector.

The MSCI Barra dollar index for global equities,  the widest possible global benchmark, is currently 43% off its highs - far less than mining stocks - but has improved by a more modest 14% from trough levels, seen over the past few weeks. Globally, bank stocks have recovered by 22%, and by about half that amount in the US. Measured in percentage terms, mining stocks recently held the status as the most oversold global equities subsector, and purely on that basis, offered one of the most attractive targets for bottom fishing.

While this has so far proved to be the case, based on the measurable flow into the more heavily capitalised mining stocks, performances among individual stocks has been widely varied. The single biggest bounce has come from Russia-based Norilsk, the world's leading nickel producer, plus a plethora of byproducts such as platinum. This bounce can be most closely connected with the extreme sell off of stocks during the recent "deleveraging" by investors across all classes of assets, where selling of Russian stocks was especially intense.

However, while Norilsk may have jumped 125% from its lows, and leaving aside corporate merger and takeover situations such as Portman (an Australian iron ore miner), strong recoveries have also been posted by the likes of New Hope, an Australian coal miner, and Eldorado, a gold stock. Looking at generic subsectors, the most attractive listed stocks, based on changed in inter-sectoral flows, are those classified under gold, copper, uranium, diamonds, and nickel.

Dollar gold bullion prices have declined 29% from highs seen in March this year, ranking the commodity as the best relative performer across the commodities complex, where prices have generally crashed.

An analysis of stock price movements among the world's biggest 100 mining stocks also indicates a significant variation in volatility, taking price changes over the past 12 months. BHP Billiton, the world's biggest diversified recourses stock, ranks as one of the least volatile, along with Barrick (the world's leading gold producer), Goldcorp, Southern Copper, Antofagasta (copper), Agnico-Eagle (gold), Buenaventura (mainly gold), Mechel (diversified), Exxaro (diversified), Randgold Resources, ERA (uranium), and Tambang Batubara (coal).

Some of the more volatile performances have been turned in by Chinese stocks, where a general equities bubble burst just over a year ago; the names include Zijin (a Tier I global gold stock), Zhongjin (another Chinese gold stock), and Chalco (a substantial Chinese aluminum producer).

Troubled stock price performances have also been turned in from other regions in the world, as seen in the cases of Bumi Resources, an Indonesian diversified stock with key interests in coal and oil, Oz Minerals, the Australia-based diversified base metals miner, Uralkali, the troubled Russian potash miner, Fortescue, the big emerging Australian iron ore name, and ENRC, the diversified Eurasian miner.

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