This week, China took several steps to revive its housing market, and the wider economy. These measures included lowering the required amount of reserve cash for banks.
Carlos De Alba, a Morgan Stanley Analyst says that metal and mining stocks are likely to benefit from an increase in demand when the Asian economies returns to growth.
The top 3 commodities that Mr. Xu believes will benefit most from China’s recent economic stimulus.
United States Steel Corporation (NYSE: X)
Morgan Stanley’s analyst believes that US Steel is a lagged company since its start this year, but China’s stimulus program could be the catalyst needed to boost the share price of the steel giant in the coming months.
The recent decline in the shares of this integrated steel producer is largely due to the uncertainty surrounding its 15 billion dollar deal with Japan’s Nippon Steel.
After Beijing’s announcement, investors may start to change their focus since China is the largest steel consumer in the world. Steel demand will increase as the economy begins to improve.
US Steel’s stock is even more attractive to buy at this time, with a dividend yield of 0.55%.
Freeport-McMoRan Inc (NYSE: FCX)
Carlos De Alba, in an advisory note to clients today, said that Freeport-McMoRan would continue its gains for the year now that China “takes deflation serious”.
China is by far the largest copper consumer in the world. The prospect of China’s economy recovering in the next few months is good news for FCX, as they are among the largest producers of copper.
Morgan Stanley’s bullish outlook on Freeport-McMoRan Inc. was based on its positive view of the New York-listed firm, which is a result of the Grasberg Mine agreement between Indonesia and Freeport McMoRan Inc. that Freeport McMoRan Inc. extended in May.
Carlos De Alba believes that Freeport-McMoRan’s shares could rise to $58 and then gain another 13%.
Vale SA (NYSE: VALE)
Morgan Stanley expects Vale, too, to emerge as a winner in the long run after China took steps to boost its economy and restore confidence.
Vale SA, one of the largest iron ore producers in the world, could see a significant increase in demand from Beijing as a result of its recovery.
Vale reported that its second-quarter net profit nearly tripled from the previous quarter. China, which is driving more nickel demand as well as Vale’s future growth, could also contribute.
Vale’s stock pays an attractive dividend yield at the moment of 11.64%, making it one to own after China announced its recent economic stimulus.
The post China stimulus: Top 3 commodity stocks to consider could be updated as new information becomes available
