Vale surges on deeper earnings view, strong Chinese demand

Remove Vale's (VALE +4%) $2.8B currency hit due to the falling Brazilian real, and the earnings picture looks much better; Nomura says earnings were $0.64/share in Q2 once the charge is excluded, beating the consensus forecast of $0.47.

Bernstein backs up the company's view that the weak real could be good news for Vale in the months ahead, but Nomura maintains slowing economic growth coupled with elevated inflation and the depreciating real likely will remain strong headwinds in H2.

Regarding China, Vale's biggest iron-ore customer, the company says it hasn't seen a significant deterioration in demand.

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