Opportunities in the natural resources sector which includes stocks such as BHP Billiton (NYSE: BHP), Rio Tinto (NYSE: RIO), Peabody Energy (NYSE: BTU), and others are at an “all time high” according to a recent research from Barings Asset Management, an investment firm based in London, England.
A major reason for the opportunities are the current low prices in the natural resources sector.
BHP Billiton, the biggest natural resources firm on the planet, is down for the last week, month, quarter, six months, and year of market action (chart below). It is much the same story with Peabody Energy, the world’s largest coal company. Rio Tinto is slumping, too.
That is where the opportunity comes in, according to the Barings Asset Management report.
The report states that the financial community has overreacted to the economic situation in China, India, and other emerging market nations that use so many natural resources such as coal, copper, and others. This happens a great deal in the short term, which results in long term opportunities for savvy investors who are patient. Barings Asset Management is bullish on the outlook for China and other emerging market nations. The recent central back action in China to reduce interest rates should help to spur economic growth.
There are many other moves that can be taken to stimulate the economies in many countries around the world by these countries.
All will benefit natural resources stocks. BHP Billiton jumped on the news that China was taking measures to jumpstart its economy, especially the housing sector. Real estate uses massive amounts of copper, steel, lumber, and other natural resources. That is true for both the residential and commercial markets. For long term investors, the recent report from Barings Asset Management is another reason to remain bullish about the natural resources sector for the future.