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Gold/Mining/Energy : Western Copper Holdings Ltd. T.WTC -- Ignore unavailable to you. Want to Upgrade?

To: Famularo who wrote (334)	7/30/1998 12:49:00 PM
From: Garry K.	Respond to of 401

Base metal prices seeing a rebound...... By DAVID THOMAS Economics Reporter The Financial Post After nearly a year of taking a steady pounding in commodity markets, base metals prices have rebounded in the past month, posting gains as high as nearly 8% in the case of zinc. The improvement is making resource stocks look more attractive, say some analysts. But most are reluctant to call the recent price movement a decisive turnaround. Commodities crucial to Canadian exporters have enjoyed a short-term rally, with copper prices up close to 7%, aluminum up 5% and nickel gaining nearly 3% over the past month. Although their fate still hinges on the rapid implementation of financial reforms in Japan, commodity markets are showing tentative signs of bottoming out, said Patricia Mohr, economist and commodities specialist at Bank of Nova Scotia. "I think we've either just seen the bottom or we're very close to it." A sea change will come only when market sentiment turns positive, she said. And a turnaround in sentiment is dependent on a return of export-led growth in Asia. Despite their gains in the past month, base metal prices have been hammered since the Asia crisis first shook global markets last fall. Copper, zinc and nickel prices are down 26%, 34% and 39% respectively in the past 12 months. "Most of the small, tentative improvement is due to optimism over the possibility of Japan making some improvement in its economy," said Mohr. "There isn't anything new on fundamental grounds." Still, the rebound is enough to make battered resource stocks start to look a little more appealing to some market watchers. Mervyn Burak, a technical analyst and investment adviser with Hudson, Que.-based Wil-Arm Inc., said the two most appealing sectors for investors to watch are base metals and gold stocks. "These have already had a major bear market of their own and although it is always possible their bear trends could continue, the odds are they are closer to bottoming out and reversing," he said in his newsletter this week. Equity strategists at L‚vesque Beaubien Geoffrion Inc. told clients in their latest report to overweight their portfolios by about one percentage point in metals and gold stocks. "There is a seasonal tendency for commodity prices to firm up in the third quarter, which is good news for resource stocks. Moreover, we see the relative downside risk of these stocks as limited," they said. Other analysts, however, remain wary of another false recovery along the lines of the spring rally in stocks that followed brief signs of life in Asian markets. "It's quite possible this will just be a head fake," said Lloyd Atkinson, a principal with fund managers Perigee Investment Counsel Inc. He said the last rebound "turned out to be nothing more than a sucker's rally." At this point, his approach is to be "significantly underweighted" in resource stocks. "We need to see a fundamental turnaround -- we're not there yet." Atkinson, who was beginning to look at the sector more favorably last month after Japan showed signs of tackling its massive bad loan problems, expects to wait a few months before seeing a rebound in commodities. Stronger demand from booming economies in Europe, especially France and Germany, has helped offset some of the decline in Asia and may have been behind the recent gains for base metals, he added. "Europe's turning up is the big swing factor for commodities at the moment," said Graham French, a resource equity fund manager for M&G Investment Management in London. A building boom in France has helped, since the construction industry is the world's biggest copper consumer, using the metal for wiring and plumbing.