2017 to be a positive year for mining sector following strong 2016: Citi analysts – by Sunny Freeman (Financial Post – January 10, 2017)


The mining sector will enjoy a positive year of growth in 2017 following a strong performance in 2016, an industry analysis by Citi suggested Monday.

Mining stocks will have a strong 2017, thanks to industry-wide trends toward increased free cash flow, upward earnings momentum and the potential to return excess capital to shareholders, Citi said.

However, it added, they are unlikely to see the same percentage increases in share prices as they did in 2016. The odds of mining overperforming the rest of the market are weak. Last year’s strong mining and commodities performance follows five straight years of underperformance.

“Outside of the super cycle (2003-2007), the sector has outperformed for two or more successive years only twice in past two decades, i.e. during tech bubble burst when the sector declined less than others, and Chinese stimulus led recovery post the crisis.”

Citi believes 2017 could unfold for the sector similarly to 2010, when momentum from the post-recession bounce in 2009 continued. The mining sector outperformed the markets by 49 per cent last year, just marginally lower than the industry’s 51 per cent showing in 2009.

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