LONDON (SHARECAST) - The outlook for the UK mining sector is now improving as expectations for quantitative easing (QE) increase, according to UBS on Monday morning.
The broker said: "QE triggers a return of capital flows to emerging markets, incentivising companies to stop running for cash and embark on a commodity bullish restocking phase. As in the past, QE is likely to drive up commodity prices and in turn mining equities."
UBS has upgraded its rating for Kazakhmys from 'sell' to 'buy' and reiterated its 'buy' calls on ENRC and Ferrexpo.
Investec has reiterated its 'hold' rating and 1,300p target price for Primark owner and sugar group Associated British Foods as the firm's pre-close trading update guided to full-year results slightly below forecasts.
"We read the FY as a little below our expectations at Group level, with the usual swings and roundabouts underneath," said analyst Martin Deboo. The slightly miss is due to weaker-than-expected profits in Ingredients.
"The two principal Divisions of Sugars and Primark (75% of profits) appear to be more or less in line with our FY12E numbers. However we expect a £100m impairment charge in Australia and weak Ingredients to embarrass ABF a little this morning," Deboo said.
Seymour Pierce has retained its 'sell' recommendation for AIM-listed oil and gas group Chariot Oil and Gas, which plummeted on Monday morning after revealing that it has plugged and abandoned its Kabeljour exploration well, offshore Namibia.
"We have been long-term 'sellers' of Chariot since our February initiation, highlighting the under explored nature of their acreage. We also pointed to the optimistic chance of success estimate prior to drilling," said Seymour's Sam Wahab.
Wahab said that the Kabeljou result, as well as the setback at Tapir South, "concludes a disappointing year for Chariot following heavy initial fundraising."