Citi goes bullish on global miners for the first time in three years

|By:, SA News Editor

“We would rather be too early than too late," Citi analysts say on going bullish on the global mining sector for the first time in three years.

Yes, Citi is concerned about the potential for long-term structural demand for commodities in China and the potential of a seasonal slowdown in Q1, but the firm foresees better bottom-up fundamentals, notably from big diversified miners such as top picks are BHP Billiton (BHP +2.6%), Rio Tinto (RIO +3.6%) and Glencore (GLCNF, GLNCY).

The firm expects a flat commodity-price environment ahead and a reduction in volatility, improving U.S. and European growth that will help boost commodities, and weakening commodity currencies from major exporters such Australia, New Zealand and South Africa that will boost miners.

Earnings momentum has become positive too, as miners are cutting costs, improving balance sheets and aligning with shareholders’ interests.

Citi still doesn't like gold and base-metal stocks; its least favorite big-cap miner is Anglo American (AAUKF, AAUKY).