London-Listed Mining Companies Surge After China’s Stimulus Announcement

Shares of mining companies listed in London saw gains on Tuesday, supported by new stimulus initiatives from China. The People’s Bank of China (PBOC) announced a reduction of reserve requirements for banks by 50 basis points, aimed at increasing liquidity in the market. Additionally, new regulations will enable funds and brokers to access central bank resources for stock purchases.

To address challenges in the struggling property market, the Chinese government also announced a reduction in mortgage rates for existing loans. Reports indicated that at least 500 billion yuan (approximately $70.8 billion) would be allocated for liquidity support aimed at local stocks.

These actions followed a prior cut in the short-term repo rate by the PBOC on Monday, which was intended to further enhance liquidity. Chinese officials are actively working to bolster economic growth amid ongoing disinflation and a prolonged downturn in the property sector. Investors have been advocating for comprehensive stimulus measures, but there remains uncertainty regarding whether these actions represent the substantial support that markets have been anticipating.

The announcement led to a surge in metal prices, with gold reaching record highs during Asian trading sessions, continuing its recent upward trend. Industrial metal prices, particularly copper, also experienced significant increases following the news.

The rise in metal prices positively impacted industrial miners in London. Companies such as Anglo American saw an increase of more than 7%, while Rio Tinto gained 4.8%. Antofagasta rose by 6.2%, and Glencore experienced a 4.9% increase in midday trading.

In Europe, broader equities, especially in the luxury sector, rose as the stimulus measures alleviated concerns about China’s economic outlook, the second-largest economy globally. Analysts at ING noted that the coordinated announcement of multiple measures is a positive indication, rather than implementing small, isolated actions. They also suggested that there is potential for additional easing in the coming months, especially as many global central banks are moving towards reducing rates. If combined with a significant fiscal policy initiative, economic momentum could improve heading into the fourth quarter.