Tuesday tips round-up: Iron ore miners, Aberdeen Asset Management

Iron ore miners may be facing much the same dilemma as OPEC is, when trying to force high-cost producers out of the market. Although plummeting crude prices may force some smaller tight oil producers to stop producing for a time, the well infrastructure and technology, once developed, will remain. Indeed, creditors who take over bust shale operators and wish to maximise their cash recovery may not be dissuaded by the price falls.

Similarly, the big miners who keep shovelling iron ore out of the ground may see only limited success in forcing smaller competitors out. Even if an operation is shut, as African Minerals decided to do on Monday with one mine, the infrastructure will continue to be in place should prices revive, writes the Financial Times’s Lex column.

Things seem to be looking up for Aberdeen Asset Management. The firm’s decision to acquire Scottish Widows Investment Partnership (SWIP) in April seems to have been well-timed. It may help to rebalance the business towards UK equities. As well, the emerging markets in which it has 25% of its assets invested should benefit from the decline in oil prices, the company’s chief executive believes. In particular, an improved economic performance may help to staunch the outflows from assets invested in those markets during the year to September.

To take note of, as regards possible risks, Aberdeen has accumulated an 8% stake in Standard Chartered, which is equivalent to a large bet that a much-feared rights issue will not materialise. Most significantly, come spring the fund manager will have a surplus of cash on its balance sheet relative to regulatory requirements. Hence, some sort of share buy-back would seem to be on the cards.

Trading on 13 times’ this year’s profits the stock is “worth a buy” for the long-term prospects, says The Times’s Tempus.