Another reason to sell miners

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From Citi:

CapturePoor capital allocation has been one of the key reasons for the significant underperformance of the sector over the past few years, which was fuelled by strong cash generation in the supercycle with lower propensity to give cash back as shareholders were probably chasing growth rather than yield. Earnings indexed from 2007 returned to same level in 2012 (Figure 1) and is forecast to fall further, to as low as 60% below the 2007 base by 2016e. This implies that any incremental volume growth did not translate to the bottom line and was more than offset by lower prices on the back of new supplies/tapering demand.

Those are bulk commodity producers. Diversifieds do a bit better:

4

Except that prices will likely fall lower than Citi expects.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.