The rise, and rise, of Chinese miners

Mining stocks continue to lead the attempted recovery in global equities; from a country perspective, mining leadership is coming mainly from China, and from a commodities perspective, from specialist miners of zinc, nickel, tin, coal and copper. Gold and primary silver miners are pretty much out of the limelight for now, nursing several months' worth of speeding tickets.

Where the broad-based MSCI Barra dollar index for all global equities has risen 28% from recent multi year lows, the world's top 100 miners, measured by market value, have increased by an average of 92%. A good deal of the outperformance is explained by the general surge in Chinese stocks; the broad CSI 300 is now up by 67% from its lows; the 81% recovery in the Micex Russia has also played a part. Russian potash miner Uralkali has bounced by more than 300% from its price lows, and Polyus, the country's leading gold digger, by more than 200%.

The 20 top performing big mining stocks list is dominated by Chinese names such as Sichuan Hongda (zinc and derivatives), which has seen its stock price rise more than 300% from lows, Ji Lin Ji En (nickel), and SDIC Xinji (power generation, coal, and other), which recently announced that it anticipates that its net profit for the first quarter of 2009 would increase by over 50% compared to that of the same period for 2008.

Other top performers include Shanxi Lu'an (coal), Shanxi Xishan, (coal and power generation), Yunnan Chihong (zinc and other), Shandong Gold, Yunnan Copper, Jiangxi Copper, Tongling (copper and other), Shenzhen Zhongjin (lead, zinc and other), Western Mining (base metals), and Shanxi Lanhua (coal and fertilisers).

Chinese mining companies, which often have close ties to government, at all levels, are benefiting heavily from China's USD 585bn stimulus package, prompted by the so-called global markets crisis. At the same time, the strong financial position of Chinese mining companies, and indirect access to the world's biggest country foreign reserves, has seen a number of vulnerable mining companies in other jurisdictions scrambling to settle deals with Chinese entities.

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