For a second straight year, Bank of America Merrill Lynch tops the sector, which is expanded from Metals & Mining to reflect the breadth of coverage that many teams are providing. Sydney-based Peter O’Connor, 49, and Yongtao Shi, 39, oversee a five-member squad that reports on 60 companies. “We expect stocks to outperform in the second half given a potential demand recovery and the attractive valuations currently in the market,” says Shi, who is headquartered in Hong Kong. However, “as growth in China moderates, we expect a structural derating of the sector.” Oversupply is the biggest issue these companies face, he adds, followed closely by earnings pressure from rising costs and falling commodities prices. “We prefer cement and copper among all the Chinese subsectors, which are currently supported by better supply-demand dynamics,” Shi explains. Clients are impressed: “They provide a global view that I find very helpful,” proclaims one ally. — Pam Baker |
Industries – Basic Materials: First
