What I Learned This Week

A buy signal for Australia’s out-of-favor mining sector. A high-quality, low-risk emerging-market beneficiary is breaking-out.

Australia’s mining sector has long intrigued us because of its extensive endowment of natural resources—especially iron ore, copper, oil, gas, coal and other precious and industrial metals—and its geographic proximity to emerging markets in Southeast Asia. With some 900 million emerging-market Asians likely to join the middle class over the next seven years, it is wise to build exposure to this burgeoning investment opportunity while valuations are still reasonable, following the post-2011 deflation in commodity prices. Moreover, the sector is well positioned to benefit from a transition away from the aggressive capacity expansions that characterized the 2005-2015 period, toward a period of…

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