These Charts Explain Why Goldman Is Backing Aussie Miners Over Banks

Goldman Sachs has urged investors to choose miners over banks as mining valuations hit decade lows.

Researchers say mining valuations are at 10-year lows compared to banks after a significant period of underperformance.

The tide is turning, they say, with banks 40% more expensive than miners.

“We expect BHP’s diverse asset base and low-cost operation to continue to deliver strong returns as Chinese commodity demand weakens,” Goldman Sachs says.

“Sell WBC [Westpac], our least preferred bank, driven by valuation and its larger exposure to a structural decline in mortgage credit growth.”

Westpac shares have fallen 1.7 percent to $28.96 since the market opened this morning. BHP shares are up 1.7 percent to $34.56.

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