BHP Billiton v Rio Tinto still a clash of the titans – by Peter Ker (Australain Financial Review – August 19, 2016)

Veteran mining analyst Glyn Lawcock has a soothing message for investors fretting over whether they should put their money into BHP Billiton or Rio Tinto.

“If you track it back long enough, the two of them are almost like porpoises; they go up together and they go down together. One might go down longer than the other occasionally, but sooner or later they come back together,” said the UBS expert this week.

While the dual-listed miners’ long-term trading trends are amazingly similar, picking the temporary diversions between BHP and Rio shares can be a lucrative sport. Take the past year; Rio’s Australian shares have declined by 2.5 per cent, while BHP’s have lost 17 per cent.

But on the flipside, BHP shares have outperformed Rio since January 1, rising 17 per cent in Australia compared to Rio’s 11 per cent. The margin has been even starker on the London exchange, where BHP are up 20 per cent compared to Rio’s 6.8 per cent.

With another reporting season now almost complete, the task of comparing the two miners is once again under way in earnest.Rio generated more revenue, higher earnings before interest and tax and higher underlying earnings in the first six months of 2016.

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