Miners continue to take a hammering. I remember a time, a few years back, when miners/oilies combined made up about 30-40% of the Footsie by market cap. That a cyclical industry composed such a large part of the Footsie should have been seen as a warning that the sector was overheated. We saw a similar situation in the late 1990’s with tech stocks.
Although it is tempting to call a bottom in miners, and I would not blame anyone if they did, it is still possible that the markets need a major flush out. There’s still quite a few miners in the Footsie, and AIM is crammed full of them.
China? My guess is that it will be the next Japan in late 1980’s. Too many people are still too positive on China, and are attempting to call the bottom. Emerging Markets always have lots of hype attached to them, and they rarely work out. China is a very heavily top-down driven country, and few good things can come from that. The problem is, it’s tried to “engineer” growth, and that tends to build up a lot of hidden risks. At the end of the day, there are no easy or fast paths to growth.
My suspicion is that China only became an “economic miracle” by undertaking projects with low returns on capital. The decision by American companies to outsource to China was entirely logical. China may have to pay a hefty price for this decision.
Probably the only emerging markets worth investing in are the basket cases.