Broker snap: Credit Suisse upgrades miners

23rd Oct 2009 12:57

Mining stocks were doing their bit to drive Footsie forward on Friday morning, helped by an upgrade on the sector by Credit Suisse, which now has a 'benchmark' rating for the miners, having downgraded the sector back in May.'We upgrade mining because: a) global excess liquidity is at an all-time high and leads commodities by a year; b) industrial commodities tend to peak four months after the peak in IP momentum (i.e., the middle of the first quarter of 2010) and when manufacturing inventories peak; c) China should grow at 9-10% GDP until 2011 and commodity prices can rise even when China's investment growth slows (as in 2004); d) China may diversify some of its $2.3tn of foreign exchange reserves into commodities given its strategic needs and an undervalued currency); e) companies, stock prices and analysts in general are discounting prices 20-45% below spot; f) unusually, the sector has lagged emerging markets,' the Swiss bank said.Credit Suisse remains concerned, however, about inventory build up in China.