WA Index

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WA Index

Issue 191 | February 2020

Welcome to the 191st edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies fell just shy of the broader All Ordinaries jump this month, but managed to outperform other global indices, climbing 4.4% to close January at $199 billion. Gold miners featured strongly in the top movers off the back of record production results, an iconic local acquisition, and a gold price bolstered by global uncertainty following the outbreak of the Novel Coronavirus.

Download the list of WA’s top 100 listed companies, as of 31 January 2020, explore the sections below and if you do not currently receive our WA Index, please register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

Highlights:

As of 31 January 2020

Commodity review

Commodity and Precious Metal Price
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  • Gold prices saw continued growth in January, increasing 4% to close at US$1,586 per ounce. The potential global economic impact of the spread of the Novel Coronavirus propped the precious metal’s price up to a 7-year high during January, supplemented by the significant monetary stimulus of central banks around the world. Minimal downward pressure arising from the signing of phase one of the US-China trade deal indicated investors may be unimpressed with the progress made, with virus fears playing a much larger role in price movements across the month.
  • Iron ore neared a 4-month high and closed 4% higher in January, finishing at a price of US$96.80 per tonne. Concerns with respect to supply constraints arising due to cyclone-related disruptionsand a coal mine death exerted upward pressure on the iron ore price prior to the onset of descending Chinese demand at the conclusion of the month.
  • Nickel prices saw a rude awakening to the 2020 calendar year following a strong performance in 2019, falling by 8% to US$12,771.50/MT. Indonesia’s ban on nickel exports as the world’s largest producer of the metal saw prices reach their lowest point since July 2019. With Chinese demand accounting for a significant portion of the global demand for metals, the decline in the price exemplified investor’s worries of a significant decline in Chinese demand.
  • Copper prices saw their heaviest monthly fall since 2015, closing 10% lower at a spot price of $5,551/mt. In the same vein as other China demand-led commodities, the Novel Coronavirus outbreak played a pivotal role in price contractions following extended shutdowns in China’s manufacturing regions subsequent to the lunar year, with Chinese businesses told not to resume work before February 10 at the earliest.
  • The Crude oil prices saw its biggest slide in 30 years having dropped 12% to $58.20/BBL. In line with other commodities heavily reliant on Chinese demand, the fall in the crude oil price is considered to be reflect of a significant demand hit on the back of the coronavirus outbreak, compounded by the oversupply of non-OPEC oil in the market. Bernstein Research estimates demand growth will drop to 100,000 barrels per day, down from the International Energy Agency’s estimate of 440,000 barrels.
  • LNG prices reached a 10-year low whilst falling 25% to US$3.8/mmbtu. The decline is attributed to seasonally weak demand from Asia, Europe and the US following significantly warmer temperatures in January. The global oversupply of LNG further compounded the downward pressure experienced, with significant selloffs in the sector noted across global markets.

Performance of WA Index and global indices

Performance of WA Index and global indices
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January saw considerable diversity in the performance of global indices, led by a 4.7% surge in the All Ordinaries in the course of breaching the 7,000 point milestone for the first time. This milestone was aided by a combination of surging healthcare stocks and the conclusion of the 18-month long tariff war between the US and China following the signing of the phase one trade deal that was reached during the month.

The other end of the spectrum saw a 3.4% fall in the FTSE 100 on the back of stagnant interest rates and the first confirmed Novel Coronavirus case in the country. The UK’s departure from the European Union at the conclusion of the month closed a bleak month for the FTSE 100, with travel bans and disruptions to supply chains leaving investors weary.

WA Index movement

Performance of Global Financial Markets over the past 12 months

WA Index movement
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Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

  • Silver Lake Resources Ltd saw significant growth in its market capitalisation, soaring 21% to close the month at $1,429m. December quarter results outlining record production of 68,519 ounces of gold and 691 tonnes of copper supported the gold producer’s price to a fresh 52-week trading high. Investors reacted positively to December quarter sales of 66,074 ounces gold and 694 tonnes of copper, which fetched an average sale price of $2,028 at an AISC of $1,192 an ounce.
  • Saracen Mineral Holdings Ltd increased its market capitalisation by 19% from $3,650m to $4,356m. Record production of 120,127 ounces at an AISC of $1,098 per ounce across the December quarter spurred the stock up the index. The record result was bolstered by the completion of the Thunderbox operator’s acquisition of Barrick’s 50% stake in the Kalgoorlie Super Pit in addition to the announcement of Northern Star’s acquisition of the remaining half.
  • Northern Star Resources Ltd grew its market capitalisation by 11% from $8,300m to $9,247m across January. The gold juggernaut joined Saracen as joint-owner of the iconic WA Super Pit gold mine, bringing the asset under all-Australian ownership. December quarter production report also detailed a strong performance including a significant improvement in gold production from the Pogo Mine with new areas on line and increased stope ore.3

Major index players in november 2019
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The top Deloitte WA Index Movers and Shakers in January were:

  • Alkane Resources Limited’s market capitalisation climbed by 37% to $458.2m on the back of outstanding results from its Tomingley Gold Operation. Production forecasts were exceeded in the course of achieving a 30% quarter-on-quarter increase in ounces of gold sold and a $4 million increase in revenue. The announcement of a maiden 445,000 JORC resource at the company’s Roswell deposit also played a pivotal role in pushing the stock up the index, with the deposit displaying the potential to provide future additional ore feed to the Tomingley gold operation. 
  • American Pacific Borates Limited marked a 36% surge in its market capitalisation to close at $103.5m. The company announced plans to increase its sulphate of potash production through an enhanced definitive feasibility study in order to take advantage of its low cost profile, with the increased scale of operations anticipated to increase annual EBITDA in full production.
  • AVZ Minerals Limited grew its market capitalisation by 33% during the month to $131.4m. The mineral explorer announced the signing of a MOU with Democratic Republic of the Congo’s Ministry of Hydraulic Resources and Energy to investigate the feasibility of refurbishment of the Mpiana-Mwanga hydro-electric power station located 85km from the Manono Lithium and Tin Project. The power plant is expected to generate significant long-term savings as an alternative to using diesel powered generators whilst making the Manono project a 100% green mine.

Top performers of the month
Select above image to enhance the Top performers of the month

If you don’t currently receive our WA Index, you can register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

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