The BHP Group Ltd (ASX: BHP) share price is down 2.23% in afternoon trading.
Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant are currently changing hands for $45.19 apiece.
This comes amid a broader market sell-off today, which sees the ASX 200 down 1.62%.
The benchmark index is following US markets lower after Fed chair Jerome Powell flagged more likely rate increases ahead, with rates forecast to stay higher for longer than markets had priced in.
That's today's BHP share price action for you.
Now, here's why Wilson Asset Management (WAM) portfolio manager Matthew Haupt has a bullish take on the ASX 200 iron ore miner over the second half of 2023.
Image source: Getty Images
What tailwinds could help boost the ASX 200 miner?
The BHP share price could be in for some more welcome tailwinds blowing out of China.
This week, the People's Bank of China (PBoC) cut both its one-year and five-year prime lending rates by 0.1%. That follows on two similar-sized rate cuts from China's central bank last week.
Why?
Here's what I wrote last week:
As most of the world is tightening, China looks set to unleash some major growth incentives to spur its sluggish economy. This could potentially see a big uptick in the Middle Kingdom's demand for commodities like iron ore and copper. Indeed, it already looks to have offered a significant price boost this month.
And most analysts expect there will be more stimulus measures announced by the government over the coming days to help spur household consumption and the construction industry.
Which brings us back to why WAM's Haupt is bullish on the BHP share price.
BHP share price could lift amid 'steady increase' in iron ore prices
A number of analysts have been forecasting the iron ore price to trade well below US$100 per tonne in the second half of 2023.
But with China's government looking to help boost its economy, Haupt believes the iron ore price will outperform consensus expectations over the next six months. With BHP deriving the majority of its revenue from the industrial metal, that would in turn help support the BHP share price.
According to Haupt (courtesy of The Australian Financial Review):
Beijing is lowering key interest rates to stimulate bank lending and is planning a round of stimulus aimed at the real estate sector, which makes up more than a quarter of the Chinese economy. This sector has been suffering the after-effects of a crackdown on developer debt.
With China's stimulus in mind, the fund manager is also more positive than many analysts on the demand outlook for copper and aluminium. Copper is BHP's number two revenue earner, so any lift in copper prices should also support the BHP share price.
"We don't expect a huge pick-up in iron ore prices, but we expect a steady increase over the rest of the year. The back half of the year will look pretty good," Haupt said.
With this in mind, Haupt has been gradually increasing WAM's exposure to BHP shares, as well as Rio Tinto Ltd (ASX: RIO) and Fortescue Metals Group Ltd (ASX: FMG) shares.
"In a world where there are not many clear trades, this one looks good to us," he said.
Haupt added, "The stimulus leaves it well positioned for growth just as the rest of the world heads into a slowdown under the burden of rising interest rates."
The BHP share price is up 10% over the past year.
