Economy

Rio Tinto and BHP Billiton undervalued

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Economy
Written by Roberta Murray   
Tuesday, 22 June 2010

Morning Business News, Tuesday 22 June: Rio Tinto, BHP Billiton, and the Budget.

 

On the company front we hear that Rio Tinto Plc (LON:RIO) and BHP Billiton (LON:BLT) have received positive reviews from the equity analyst team at investment bank Macquarie.

Equities has lifted the weighting of BHP Billiton and Rio Tinto in its model Australian equities portfolio because BHP and Rio, in particular, are trading near their lowest valuations seen over the past two decades, at a time when their earnings growth outlooks remain very strong.

Macquarie believe Rio Tinto remains a standout cheap stock in the equity markets as the relative PER valuation stands at a 34% discount to a market PER which is also undervalued.

Both Rio Tinto and BHP Billiton have been big winners of news that China would let its currency depreciate.

A broker note from Southern Cross Equities says resources stocks are likely the strongest beneficiaries of further yuan appreciation today.

Southern Cross believes China has embarked on a slow and steady appreciation of the yuan and as a result yesterday's stellar rises could have been a little on the heated side.

 

The Emergency Budget


On the economic front there is only one piece of news worth looking at.

The emergency budget id to be delivered by Chancellor George Osborne at 1230 GMT.

The Times writes that the emergency budget is expected to be the harshest in last 30 years.

Meanwhile Britons are taking an increasingly pessimistic view of the economy, with a third worrying more about losing their job than they did three months ago, according to a survey by the Association of British Insurers.

The survey says the number of people who think the economic situation has worsened over the past 12 months rose to 45% between April and June, from 40% in the first quarter.

The survey, in which almost 3,000 adults were polled between 18 and 20 May, is the first snapshot of the public’s views on the economy since the new coalition government took office.



 
 
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