The Week in Stocks: Mining bears and retail bulls

The week was dominated by contrasting views on the path of commodities prices, while retailer JB Hi-Fi stared down the short-sellers.

As September draws to a close, we have seen another impressive week on the markets, reaching a five-and-a-half year high on Friday to close comfortably above 5,300 points. The week has seen some window dressing as fund managers push up prices ahead of the end of the quarter.

Mining Bears

An enthralling debate took place between two heavyweights on the investment front from in the US in Jim O’Neill and Jim Chanos at a Bloomberg conference on Wednesday.

The eternal China bear, Chanos had some sobering commentary for any investors with exposure to mining-related stocks. The famous hedge-fund manager has a short position on Fortescue Metals Group.

Chanos is calling an oversupply of iron ore and copper and his view could shape investment strategies for the year ahead. Now would be the time to listen and position portfolio’s accordingly.

While O’Neill agrees with Chanos’ view on mining investments, he still remains very bullish on the rise of China as an economy. If you are looking for comfort on the state of China, look no further than O’Neill. 

BHP Billiton

BHP’s annual report was released on Wednesday morning and provided honest commentary about the past year. It also cleared up some misconceptions about the importance of China to Australia’s largest public company.

Overall, China accounts for just over half of BHP’s iron ore sales and less than one third of revenue. While Chanos hasn’t provided any commentary on his position on BHP it is substantially more diversified than Fortecue, which is specifically an iron ore producer.

Investors have not been deterred by Chanos’ comments, with Fortescue, BHP Billiton and Rio Tinto all gaining since the lively debate.

JB Hi-Fi

Fast becoming everyone’s favourite retailer once again, JB Hi-Fi gained 8.4 per cent for the week as investors pushed the price higher by closing out their short positions.

Earlier this year, JB Hi-Fi was one of the most heavily shorted stocks on the ASX as investors were betting the retailer would run into trouble in a weak retail environment. But an impressive reporting season and recovering consumer confidence has seen the share price gain 12 per cent since reporting on August 12.

Further support for JB Hi-Fi came after upmarket chain David Jones and niche retailer Kathmandu both reported numbers in line with consensus views, which were enough to spur investor appetite for retailers.