Mining stocks, which can cause heavy mining losses, have been hit hard by recent mining disasters in China and elsewhere.
The Chinese government has responded to these setbacks by tightening controls over the market and encouraging miners to diversify their holdings.
But with the stock market down sharply in the past two months, some analysts say investors may be hesitant to make big investments in mining stocks, given the risks they pose.
“The big question is whether investors will be willing to go all in on mining stocks when it’s still a safe bet to do so,” said Adam Kessel, senior vice-president of research at brokerage AMEX.
“It’s a tough sell to me right now.”
China’s mining stock market fell nearly 2 per cent last month.
In February, it was up 1.4 per cent.
With China facing more severe mining disasters, the Canadian dollar has fallen sharply, making it more expensive for Canadian exports to China to pay for imports.
The Canadian dollar’s drop is already hurting Canadian exports.
On Thursday, the U.S. Commerce Department said the trade deficit with China reached $1.9 billion for the month, the largest trade gap in four years.
That is a significant blow to Canada’s export industries, which are in decline.
While the U, U.K. and other countries have cut their trade deficits with China to near-record lows, Canada is now in a more precarious position.
Canada’s economy is growing slowly and its export prices have continued to fall.
That means imports have not kept up.
As a result, Canada’s exports to the U and U.A.E. have contracted by about 1 per cent for the year to date, compared with a 7 per cent drop in China’s imports.
“We need to keep our eyes on the prize and make sure we do everything we can to minimize the impact of this,” said Steve Lecce, chief executive officer of mining stock fund and advisory firm Global Asset Management.
“That’s why I’m not going to be buying mining stocks.”
Canadian stocks are also down more than 3 per cent from a year ago.