Trump win a boost for miners

[SANTIAGO] As Donald Trump's shock presidential election victory ripples through financial markets, it's far from doom and gloom for metals producers, according to Jefferies Group LLC.

Miners such as Freeport-McMoRan Inc are set to benefit on the prospect of increased US infrastructure spending that pushes up demand for copper and other mined commodities at a time of tightening global supply, Jefferies analysts including Christopher LaFemina wrote in a note to clients Wednesday. A weaker dollar would also be a positive for copper and gold.

"Trump is high risk but should be positive for Freeport," the analysts wrote. "We expect Freeport to break through US$15 a share over the next year, with much greater upside thereafter." The Phoenix-based miner, which is the largest publicly traded copper producer, has gained 79 per cent to US$12.09 this year after tumbling 71 per cent last year. Miners are emerging from the worst commodities slump in a generation that pummeled their debt metrics.

Mr Trump, who has called for US$1 trillion of infrastructure investment over the next decade, reiterated the importance of infrastructure spending in his victory speech.

"An increase in infrastructure spending, corporate tax cuts, and lower income tax rates could be a positive for US growth even if funded with deficit spending," the analysts wrote. "The miners should benefit from improvements in demand in the US."

BLOOMBERG