Jim Copland, Investment Director at IFM Investors: Is it the end of the resources bear market

Jim Copland, Investment Director at IFM Investors: Is it the end of the resources bear market? Small Resources are trading below the GFC trough, and at one-third of its all-time peak. Bears would argue they continue to go lower because metals and bulks are currently in surplus and Chinese demand is tepid. But we believe China is OK, and the supply side will again struggle to keep pace with demand. This should see commodity prices well supported and potentially going higher. Miners are now generally providing, and achieving, more realistic guidance. Furthermore, value has undoubtedly emerged, with resources stocks trading at 20-40% discounts to NPV. So we think the downside risks are small compared to the upside potential. We prefer quality names in the bottom half of the cost curve, across a range of commodities, especially those with strong management teams and good profit and dividend discipline.