Down 19% since June, where to next for the Rio Tinto share price?

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the Rio Tinto Limited (ASX: RIO) share price has tumbled in recent months, losing nearly 19% since June 1.

Rio’s shares started in June at $114.91 each and are currently trading at $93.24 a share.

Meanwhile, the S&P/ASX 200 Materials Index (ASX:XMJ) has also been affected in the same time period, losing around 13%.

But there are some perspectives and new developments to consider that may put this performance in a new light. We’ll see.

What is happening in China?

There is a glimmer of optimism that China’s housing crisis woes may be beginning to ease, as reported by my colleague Fool Monica.

China is reportedly stepping up its support for its housing industry and easing some restrictions in its ongoing zero-COVID policies.

in a investigation Note on Friday, ANZ Australian economics chief David Plank said the easing of curfews in the city of Chengdu had helped iron ore demand prospects.

On the same day, Morgan Stanley also upgraded its outlook for aluminum. The brokerage raised its forecast for the price of aluminum by 17% to US$2,525 per tonne.

This followed speculation of widespread cuts in aluminum production in China due to the nation’s rising energy costs.

The importance of the Chinese market?

However, one analyst says Australia’s, and Rio Tinto’s, dependence on China may be an artifact of our prejudices and memories rather than fact.

Fisher Investments founder Ken Fisher notes that Australia’s exports to China are down 11.3% year-over-year despite growth in Australia’s net exports. 30.3%.

He attributes this largely to the growth in Australian exports to developed and emerging economies such as South Korea and India, as reported by the australian.

Fisher also provided a more detailed analysis of Australia’s perceived over-reliance on China.

What did Fisher say?

Fisher noted that China’s explosive growth in recent decades may have reached a point of diminishing returns, with towns and cities now more interconnected than at any time before.

He argued that establishing the provisional infrastructure allowed the Chinese economy to prosper by unifying the pipelines of its industry. However, now that that phase of meteoric growth is over, he expects it to slow to levels seen by more developed economies.

China’s gross domestic product (GDP) is expected to grow 3.9% in 2022, a far cry from its peak of 14.2% in 2007.

Fisher noted that ongoing China slowdown fears might be overblown, stating that “Australia is not a one-trick export horse dependent on bingeing on Chinese commodities.”

He said part of why people assume China is critical to the health of the Australian economy and exporters is that during the global financial crisis China was still developing rapidly and its demand for raw materials is what kept Australia at bay. float while other economies failed.

But, Fisher said, times have changed and there has been a long-term correlation between China’s GDP decline and the S&P/ASX 200 Index (ASX: XJO) ascending:

History shows that the slowdown in Chinese growth does not in itself doom the ASX. After China’s GDP growth peaked at 14.2% in 2007, it slowed in 10 of the next 12 years before the resulting COVID-19 skew. The ASX 200 rose in nine of those 12 years, rising 150.5 percent, outperforming global stocks’ 132.8 percent rise.

Driving the point home, Fisher concluded:

Inflated fears of China have haunted Australian stocks for years. But remember: false fears are optimists, always and everywhere. So is feeling depressed. He doesn’t let today’s gloomy headlines scare him away from the upcoming recovery.

Rio Tinto share price snapshot

Rio Tinto’s share price is down 6.9% year-to-date and 5.7% in the last 12 months.

This compares to the ASX 200’s nearly 10% drop in 2022 so far and 9% loss in the past year.

Rio’s current market capitalization is approximately $34.6 billion.

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