Teck to ride the mining bull market in 2017 – #SaxoStrats
Momentum continues to be strong in the metals & mining segment, outpacing all other industries globally. Given recent macro indicators we believe good conditions will remain well into 2017. The Chinese PPI y/y has risen 12 percentage points the past year to 5.5% y/y in December, signalling that China is now exporting significant inflation into the global economy. In addition, inflationary pressures are building in both the US and Europe.
We are issuing a buy recommendation on Teck Resources (TECK_B:xtse) but implementing a rather tight stop at 26.50 in order to not be caught on the wrong side should momentum reverse sharply due to deteriorating macro fundamentals over the coming months.
Teck Resources 5-year weekly price chart
Entry: buy TECK_B:xtse at market
Stop: we are recommending a stop order at 26.50, as a breakout below this level indicates that the strong momentum has reversed.
Target: we issue this trade idea with a target price of 40 indicating 35% upside from yesterday's close price.
Time horizon: the tight stop indicates that we do not see this as a strategic trade but more a continuation of the strong momentum. As a result the time horizon is expected to medium with our expectation around six months.
— Edited by Clare MacCarthy
Non-independent investment research disclaimer applies. Read more