Chinese Growth Lifts UK Listed Miners & UK Retail Sales Eyed — City Index UK

LONDON–(Marketwire – January 21, 2013) – City Index UK: Stronger than expected Chinese growth figures helped to lift UK listed miners in a slow start to trading on Friday in London. Chinese GDP bounced back to grow at 7.9% in the fourth quarter, its first growth in expansion for 7 quarters and lofting optimism that resource demand can continue to track a similar rate of expansion.

Read Full Article at Chinese growth lifts UK listed miners & UK retail sales eyed

Listed UK miners are dependent on Chinese demand for resources. The correlation between Chinese GDP and the FTSE 350 mining sector is undeniable. As such, it is no real surprise to see miners such as BHP Billiton lifted in trading today, with Chinese GDP beating forecasts of 7.8% growth in Q4.

Chinese industrial production increased to 10.3% against expectations of 10.1% whilst retail sales also grew faster than expected to 15.2%.

The key here however will be sustainability. Investors in mining stocks can ill afford volatility in Chinese growth after consecutive quarterly slowdowns and given the rate of spending in Chinese infrastructure to help speed growth. We are still awaiting broader evidence of the People’s Bank of China’s next move in terms of stimulus and Chinese inflation — which increased to 2.5% last month (stronger than expected) — will inevitably be a key measure to take into consideration for further monetary expansion.

The FTSE 350 mining sector has underperformed the benchmark UK Index already this year, despite the positive tone to trading and risk appetite. Read more

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