Indian billionaire investor Rakesh Jhunjhunwala says he's very upbeat about his country's growth potential after the country underwent a massive banking crisis and the rollout...Asia Economyread more
There's more pain ahead for the U.S. and China amid their bilateral trade dispute, according to one expert.China Politicsread more
The U.S. government on Monday temporarily eased some trade restrictions imposed recently on China's Huawei, a move that sought to minimize disruption for the telecom company's...Technologyread more
You know there's an underlying problem when investment firms start to cut exposure to a particular asset class.Commentaryread more
Stocks in Asia mostly recovered in Tuesday afternoon trade as investors cheered a reprieve in U.S.-China trade tensions surrounding Chinese telecommunications giant Huawei.Asia Marketsread more
The issue of corporate debt has surfaced as companies continue to use the low rates the Fed has provided to lever up their balance sheets.The Fedread more
A record 257.4 million travelers are expected to opt for U.S. airlines for travel this summer, the 10th consecutive annual increase, a trade group forecast on Tuesday.Airlinesread more
Huya, a Chinese live streaming platform focused on gaming, is looking to expand into the U.S. in the next couple of years, CEO Rongjie Dong told CNBC. The U.S. is expected to...Technologyread more
Most U.S. hedge funds aren't expecting another big stock market sell-off as more firms curb bets on volatility, according to Nomura.Marketsread more
Mall owners are increasingly building out food halls with local chef-driven eateries, sushi bars and premium coffee shops.Retailread more
While Trump's lawyers had argued that the committee's subpoena did not have a legitimate legislative purpose — and was therefore invalid — Mehta took a broader view.Politicsread more
* Global diversified miners lag FTSE 100 valuation
* Demand, ESG, capex plans outweigh financial health
* Sector crucial to global shift to low-carbon economy
LONDON, May 8 (Reuters) - The world's biggest diversified miners have yet to see their share prices reflect their role as providers of the minerals needed for a shift to a low-carbon economy.
Mining companies provide minerals such as cobalt used in electric vehicle batteries and copper for increased electrification, and the sector's balance sheets are in rude health.
Still, many investors are wary. Concerns include the demand outlook from China, the world's biggest consumer of metals; the sector's history of wasting shareholders' money on mergers and acquisitions that never deliver returns; and a patchy record on environmental, social and governance-related (ESG) issues.
Reminders of the dangers include a disaster in Brazil at a Vale tailings dam in January that killed an estimated 300 people, and a U.S. corruption investigation into Glencore , announced in April.
Refinitiv data shows the Big Four diversified miners - Rio Tinto , BHP , Anglo American and Glencore - trading at a lower forward 12-months price-to-earnings multiple than Britain's FTSE 100.
"All the large mining companies are trading on high free cash flow yields relative to the broader market when you adjust for capital spending on growth projects," said Nick Stansbury, head of commodity research at Legal & General Investment Management (LGIM).
"This is indicative of the market's skepticism about the sustainability of those cash flows, the robustness of capital allocation by management and the sectors challenges around ESG issues."
James Clunie, fund manager at Jupiter Fund Management, which holds shares in Rio Tinto and BHP, agreed uncertainty around medium-term commodity prices was a deterrent.
"A whole class of people say 'I'm out' because of that uncertainty, and that leads to (the stocks') undervaluation," he said.
For an interactive version of the graphic, click here https://tmsnrt.rs/2GSDbei.
The same attitude is reflected in the ratings given to the four companies by brokers, with most favoring a fence-sitting "hold" recommendation.
For an interactive version of the graphic, click here https://tmsnrt.rs/2DIaVsN.
On the flipside, others focus on how the miners have transformed their balance sheets and improved governance.
"Compared to the past, the resources sector is carrying a fraction of the leverage it used to, which should reduce the volatility of the shares," Evy Hambro, manager of the world's largest actively managed mining equity fund, BlackRock's BGF World Mining Fund, told Reuters.
"In addition, the improved capital discipline combined with lower levels of reinvestment has increased the free cash flow available to shareholders and resulted in rising distributions to shareholders."
BlackRock is the world's largest money manager, with some $6 trillion in assets. Hambro manages a combined $11.9 billion across several funds.
For an interactive version of the graphic, click here https://tmsnrt.rs/2VEal9z.
For an interactive version of the graphic, click here https://tmsnrt.rs/2DHI9sc.
For an interactive version of the graphic, click here https://tmsnrt.rs/2VG8y3W.
For an interactive version of the graphic, click here https://tmsnrt.rs/2VIClZK.
LGIM's Stansbury said the sector was wrestling with several paradoxes.
"They are one of the most crucial industries in the fight against climate change," he said, referring to the minerals they can produce to roll out electrification and renewable energy.
But extracting those minerals results in high levels of emissions, volumes of water consumption and fatalities, despite promises from major miners to eliminate harm.
Mining can also lift large numbers of people out of poverty by providing well-paid jobs and helping to roll out electrification in emerging economies, but operating in the fragile democracies where some of the richest resources are found can expose miners to corruption allegations.
"It is essential the sector makes further progress on transparency and corruption. Investors need to be confident that the government take from resource extraction is used for the benefit of the local population," Stansbury said.
Another concern is that the sector's financial health could be setting it up for a fall.
"Counterintuitively the risks around misallocation of capital are greater now that the sector has largely resolved their balance sheet problems," Stansbury said.
"At the bottom of the last cycle the sector just didn't have the money to spend unwisely on bad projects. Now they do, so it's no surprise that these concerns are rising again in investor's minds."
(Editing by Dale Hudson)