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Analysis
WA Index
Issue 156 | June 2016
Welcome to the 156th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.
Explore content
- Download WA's Top 100 listed companies
- Commodity Review
- Performance of WA Index and global indices
- WA Index movement
- Top performers of the month
Download the list of WA’s top 100 listed companies, as of 31st May, explore the sections below and if you don’t currently receive our WA Index, please register to be added to our distribution list.
Highlights
- Commodity review
- Performance of WA Index and global indices
- WA Index movement
- Top performers of the month.
If you have any questions in relation to the Deloitte WA Index please contact Angela McIlroy.
Commodity review
Movements in commodity prices for the month of May make for sombre reading, with declines in all commodities surveyed barring crude oil, coal and uranium. Continued poor performance is primarily due to increased supply coming online, whilst at the same
On a positive
Iron ore prices slumped to US$51 per tonne after reaching highs close to US$70 per tonne in April. The iron ore price followed a decrease in the pricing of iron ore futures.
Gold and silver prices decreased by 6.0% and 10.4% respectively. Gold declined after Federal Reserve Chairwoman Janet Yellen advised that an interest rate hike is likely if positive economic data regarding the US economy occurs as expected. Any increase in US interest rates would move demand away from
Palladium prices decreased 14.0% in the month of May on the back of concerns
It was a poor month for industrial metals with decreases for copper, nickel, aluminium, lead, zinc and tin. This has been largely predicated on poor economic data from China. Nickel is still hampered by stockpiles accrued before the Indonesian export ban, in addition to weak demand from China.
Lead prices also decreased by 6.1% during May. The price of lead is significantly weighted towards demand for lead-acid batteries in China. Two isolated regulatory changes in China, firstly a new tax imposed on lead-acid batteries in favour of more environmentally friendly batteries and secondly a crackdown on electric bikes amid road safety issues, caused the price drop in
Uranium prices remain steady, with the increase experienced during the month reflecting optimism in the long term demand for the commodity. However in the short
Commodity and Precious Metal Prices
The Deloitte WA Index declined by 2.8% during the month of May, with the market capitalisation of Western Australian listed companies closing the month at AU$132.4bn.
Among the major Index players:
- Northern Star Resources Limited’s market capitalisation rose by AU$264m (11.4%) during the month as the company continued on a stable path of growth, aided by a depreciating Australian dollar and strong operational performance. For the 2016 financial year, Northern Star budgeted to spend $74m on exploration and expansionary capital expenditure in order to expand production organically, with $18m spent in the March 2016 quarter
- Pilbara Minerals Limited’s market capitalisation grew by AU$151m (25.4%) as a result of a number of events including continued positive exploration results at the Company’s flagship Pilgangoora project, increased interest by investors in lithium , and the completion of equity raisings during the month
- Galaxy Resources Limited’s market capitalisation increased by AU$99m (20.2%) during May, with the increase driven by strong market interest in lithium, and also the proposed merger with joint venture partner General Mining Corporation, which combined, would make the group one of the largest local lithium exploration and production company’s.
Most equity markets surveyed posted positive results in May:
- The All Ordinaries gained 2.5%, largely driven by improved global sentiment, oil prices rising above $US50 a barrel, weak inflation numbers and an interest rate cut early in the month
- The Nikkei posted the most notable improvement, increasing by 3.4%. The performance of the Japanese market was largely due to a weaker Yen and the increasing probability that what was thought to be an imminent consumption tax rise would be delayed
- The S&P 500 rose 1.5%, with investors encouraged by a potential hike in US interest rates in June and an increasing perception that the US economy can endure a steady rise in interest rates
- The FTSE 100 remained stagnant, decreasing slightly by 0.2%. In a volatile month, it was hit by results of Brexit polling that revealed voters favoured the UK leaving the EU, resulting in
widespread selling of Pound sterling.
Top Deloitte WA Index Movers and Shakers in May included:
- Atlas Iron Limited (AGO), which posted
a 119.6% increase in market capitalisation from AU$61m to AU$135m. The positive performance was mainly attributable to recent debt restructuring, giving lenders a cumulative stake of approximately 70% in the company and an extended maturity date to 2021. The investor presentation released in May also resonated with investors, as Atlas Iron continued to cut costs and expand into the growing lithium market - Base Resources Limited (BSE), posted an 81.0% increase in market capitalisation, from AU$46m to AU$83m, on the back of positive announcements by its peers in relation to improving general market conditions for mineral sands
- Lithium Australia NL (LIT), which posted a 73.1% increase in market capitalisation, from AU$55m to AU$95m. On 26 May, the company announced it had earned the first 25% in the Electra Project located along the Sonora lithium clay deposit in Mexico. This new and significant interest opens up exploration in a world-class area and allows the opportunity to advance a commercial processing technology applicable to lithium clay deposits.
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 Angela McIlroy.