I think the BHP Group Ltd (ASX: BHP) share price could be a good hedge right now.
Investors are starting to talk about a “two-speed” share market. We’re seeing a real split across the S&P/ASX 200 Index (ASX: XJO) between the winners and losers in the current economy.
On the one hand, industries like travel and hospitality are struggling. However, some mining sectors, tech and gold are booming in the current climate.
I think the BHP share price could be part of that “quicker speed” part of the economy. And that’s why it could be a good coronavirus hedge right now.
Why the BHP share price has been surging higher
Shares in the Aussie iron ore miners have done reasonably well this year.
The BHP share price is down 2.6% for the year while Fortescue Metals Group Limited (ASX: FMG) and Rio Tinto Ltd (ASX: RIO) shares have climbed 69.8% and 2.8% higher, respectively.
For context, the S&P/ASX 200 Index (ASX: XJO) is down 10.3% in the year to date.
The key factor here has been surging iron ore prices. Demand out of China has been strong as the country’s infrastructure boom continues.
That is good news for the BHP share price and the miner’s August earnings result. BHP is set to announce its FY20 result on August 18 and it’ll be one worth watching.
Why BHP could be a coronavirus hedge
It seems like much of BHP’s fortunes currently rest with China. While many ASX 200 shares are struggling, this unconventional share price driver could make BHP a good hedge.
Despite all the rhetoric around trade diversification and a move away from China, it still makes up 48.8% of Australia’s exports.
That’s good news for the iron ore miners like BHP. If the demand for iron ore remains strong, the BHP share price could break even in no time.
In fact, if Australia starts an infrastructure boom of its own, BHP shares could be back in positive territory by the end of the year.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
More reading
- Overvalued or a strong buy? Nextdc and 1 more ASX growth share to watch
- Will the Domino’s share price continue to surge in August?
- Nick Scali share price bolstered by strong outlook and dividend upgrade
- Up 21% in a month, is the Northern Star share price a buy?
- Why I would buy CBA and this ASX dividend share
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Is the BHP share price a good coronavirus hedge? appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/2XwvEto
Leave a Reply