Bashed, beaten and unloved, mining stocks have fallen out of favor with investors in the last two years as commodity prices showed signs of peaking. But just when things could have turned from bad to worse it appears that the basic resources sector is the new contrarian play for 2014.
Nothing sums up the change in opinion better than JPMorgan's assessment of the situation in a research note on Monday. Detailing a rebound in activity, the U.S. investment bank has stated it is now "overweight" on the mining sector, after being "underweight" for the last two years.
"We believe the risk-reward for miners is improving," a European equity strategy team led by Mislav Matejka said in a note on Monday. "We have been structurally cautious on miners for nearly three years, but believe one should be reversing that stance now."
The basic resources sector added 2 percent on Monday with this bullish outlook adding to positive data coming out of China. U.K.-listed Rio Tinto climbed 3.2 percent by midday with JPMorgan adding it to its list of top picks with BHP Billiton rising 2.3 percent for the same reason.