Coal is lagging other sectors as investors' expectations remain low. However, this looks like an opportunity for a contrarian and value trade until end of year given cheap multiples (3-5x PER). Switch from consumer-related (Consumption: Structurally Weak & Bearish), if need to raise cash. Appreciating USD, higher inflation expectations and par domestic activities might give coal sector a good sentiment (not necessarily fundamental). Meanwhile, earnings downgrade are lagging since investors already assume commodity prices were going to be lower in 2023-2024 from 2022 peak.

The sector has light positioning relative to others that would benefit from inflows to equity (possibly from bond outflows), if any. Concerns on China come from high expectations in growth and stimulus to begin with as the challenges of the economy already started since last year. Stable commodity prices seen in gas, oil and coal despite subdued macro backdrop seem to indicate the bottom for energy benchmark prices. Winter is coming in 3-4 months, so might be early but could be rewarding. Downside risks: Global hard landing led by US, worsening Chinese economy.