Our Outlook for Basic Materials Stocks
The prospect of Chinese fiscal stimulus has taken center stage for basic materials shares, but we doubt anything on the scale of the 2008-09 package is in the cards.
As we write, basic materials stocks have been enjoying a strong conclusion to the third quarter. From Sept. 1-14, the median coal company we cover gained 24% (a figure bolstered by the industry's heavy indebtedness). Meanwhile, our median miner was up 18% and the median steel producer gained 15%. Domestic aggregates producers gained 23%. Performance was more muted in the less cyclical corners of the basic materials space, with packaging firms up 3% and paper producers gaining 9%. The S&P 500, for reference, was up 4%.
Daniel Rohr does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.