Miners are the hot sector in London at the moment, but sadly for all the wrong reasons. Multi-year lows in share prices, falling commodity prices and surging output, and now dividend cuts, have all conspired to make the sector the most unloved of the year. As we look into 2016, is it time to step in ahead of a bounce?
The answer, unfortunately, is a resounding ‘no’. For a variety of reasons, it looks like the current fundamental story will remain unchanged. Miners find themselves in a deep hole (pun intended) and will keep digging for a long time – in the good times they assumed Chinese demand would go on forever, with the world’s second-largest economy seemingly insatiable in its demand for raw materials. But with GDP growth in China coming off its record highs and services growth overtaking manufacturing, it seems the era of Chinese demand is drawing to a close.