Iron ore price slumps to three-week low on weak China demand, strong global supply
Property investment in China fell 10.1% in the first half of 2024 from a year earlier.
MMG (HSX:1208) CEO Andrew Michelmore says China’s leadership transition later this year could put the brakes on overseas investment due to impeded decision-making by China’s policy-making elite.
The Australian reports that Michelmore said in a speech at the Melbourne Mining Club on Tuesday that the reshuffling of China’s top leadership at the Chinese Communist Party’s 18th National Congress in October this year would temporarily inhibit overseas investment.
“What you see in China at the moment is a lull as they sort out the new premier, president, Politburo and the CEOs of the state-owned entities. Until that’s settled, any investments going forward won’t happen,” said Moore.
Under China’s current political system key members of its leadership team serve for ten year terms and are succeeded at even-numbered meetings of the Chinese Communist Party’s National Congress which are held at five years intervals.
Michelmore is especially well placed to understand the workings of China’s overseas investment policies, as MMG is a China-controlled miner which is listed in Hong Kong and headquartered in Melbourne.
MMG was known as ‘Minmetals Resources’ until its official name change was approved earlier this week. The company is under the control of leading Chinese metals trader Minmetals and engages primarily in the development of zinc and copper mines.
Michelmore also denied speculation that the leadership change would be delayed until the following year, saying that “. . . everything’s trying to be pushed to get it done by November.”
According to Australia’s Financial Review, despite his prediction of a temporary lull in Chinese investment Michelmore remains tepidly optimistic about the country’s future economic prospects and its impact upon Australia’s resources sector, saying that although the era of rising commodities prices is over “. . .there’s still a hell of a long way to go’ with respect to China’s economic fundamentals.”
