Mining Stock Prices May Suffer from Rising Costs and Flat Metal Prices
Source: Reuters (9/19/07)
A slowdown in earnings growth at mining firms is likely to accelerate amid rising costs and flat or weaker metals prices that threaten the industry's hefty margins.
Demand from burgeoning economies in China and India may still underpin the sector in coming years, but the easy money generated during blistering rallies in metals prices is coming to an end, some analysts and fund managers warn.
While mining shares are still outperforming the broad market, some are wary of earnings prospects and have already shed key mining stocks.
"It's what I call a 'dance close to the door'. If you haven't already made some plans, you should be making some plans to reduce in my opinion," said Liston Meintjes, chief investment officer at Metropolitan Asset Managers in Cape Town.