Global miner stocks and sector-related exchange traded funds have suffered a huge blow and could continue to struggle on a weak commodities outlook.
The SPDR Metals & Mining ETF (NYSEArca: XME) has declined 14.9% year-to-date and plunged 34.2% over the past year. Meanwhile, the iShares MSCI Global Metals & Mining Producers ETF (NYSEArca: PICK) dipped 2.8% so far this year and fell 20.6% over the past year.
The world’s largest miners have lost $156 billion in market value last year and may experience a hard uphill battle ahead as a downturn in resource prices and lower demand out of China keep pressure on commodities, reports Nyshka Chandran for CNBC.
“Miners will need to need to stay on the defensive and in lean, fighting form, as they bob and weave through a number of ongoing challenges ranging from slumping commodity prices and volatile markets, to growing pressures from government and shareholders,” according to PwC.
The top 40 miners’ market capitalization have dropped to $791 billion as of the end of 2014, or 16% below 2013 levels and half the value from four years ago. The falling off in the miners space follows the severe drop in resource prices, with iron ore down 30% and Brent crude 44% lower.
Iron ore majros like BHP Billiton (NYSE: BHP), Rio Tinto (NYSE: RIO) and Value (NYSE: VAL) have created a glut in supply.
PICK includes a hefty 10.3% tilt toward BHP, 8.2% in RIO and 2.7% in Vale.