This chart of China's economic performance and resource sector equity prices highlights a severe adverse reaction to the loss of momentum in Chinese economic...

John Robertson

PortfolioDirect

This chart of China's economic performance and resource sector equity prices highlights a severe adverse reaction to the loss of momentum in Chinese economic activity. The reaction belies recent statistics on rates of metal usage. The International Copper Study Group has reported that global copper usage over the first eight months of 2014 was 12.2% higher than over the same period of 2013 (including an estimated increase of 27% in China). The International Lead Zinc Study Group showed zinc usage up 7.4% over the first nine months and a 13.4% increase in China. Accepting some qualms about the way Chinese statistics are collected, these outcomes are still consistent with a recovering global economy and markets pushing toward a rebalancing which will result in an eventual cyclical recovery. Other influences seem to have been overtaking China activity rates in importance. Falling iron ore and crude oil prices due to supply side influences are having an impact. Currency movements which are adding to the risk are discouraging investors.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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