Here’s some good advice for any punters out there desperate to get into Australian mining, from the AFR:
The hedge fund, LIM Advisors, is currently raising $US400 million in total to invest in distressed situations in the Asia-Pacific region, founder and CEO, George Long, told the Australian Financial Review.
Mr Long said he believed the pain investors in mining and mining services companies have already felt on the back of the recent plummeting commodity prices will get worse before it gets better.
“There will be a mining and mining services industry in some form at the end of the day, even at the bottom of the cycle…it’s not possible in the modern economy to not have a mining industry. But we’ll see a lot of consolidation. Junior minors will get wiped out, BHP and RIO will go on,” Long described.
Given China is emerging as one of the central crumbling pillars in the forthcoming end of cycle bust over the next few years, I really don’t see any need to buy mining and related firms until the crisis becomes full blown. Even then I’d expect another muted cycle before sectors really rebound sustainably. Oversupply is that big.
Still, the wipe out ahead will be akin to a deep and smoking crater unlike anything seen in decades so that’ll be the time to pick off some of those poor patsies buying for yield today.
