WA Index

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WA Index

Issue 189 | November 2019

Welcome to the 189th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies remained relatively stable across the month of October, moving by 0.1 per cent to close at $187.9bn. The WA Index was unable to garner the same benefits realised by the S&P 500 and Nikkei upon advancements in US-China trade talks.

Download the list of WA’s top 100 listed companies, as of 31 October 2019, explore the sections below and if you do not currently receive our WA Index, please register to be added to our distribution list.

Highlights:

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

As of 31 October 2019

Commodity review

Commodity and Precious Metal Prices
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  • LNG rose 10 per cent in October to close at a price of US$6.3/mmbtu on the back of strong demand for pre-winter cargoes. The spot prices for cargo deliveries in November/ December are estimated at US$6.80 per mmbtu, which is a 35 cent (six per cent) increase in a week as demand for LNG from Japan, South Korea and Pakistan, spiked the spot price. The supply side faced pressure due to a number of outages as facilities in Qatar and Australia went offline for planned maintenance.
  • Zinc displayed strong growth during the month as the spot price increased 9.3 per cent from US$2,569 at October 31. The price has climbed towards a four-month high after slumping stocks fuelled fears of shortages of the metal. China’s latest indicators suggest steel production is growing, which has further stimulated the demand for zinc.
  • Lead closed the month 8.2 per cent higher at a price of US$2,226 per tonne. The supply side has been the biggest contributor to the lead industry, with several supply disruptions including a production outage at the world’s largest smelting operations at Port Pirie in Australia. The lead supply issues have been compounded as industry leader Nyrstar announced in its production report that Lead output is expected to fall 27 per cent for the year, as industrial demand from the US and China continues to weigh on traditional battery metals.
  • Iron Ore prices have dipped considerably throughout October to close at US$85 per tonne. The recent trend in iron ore has come from the unwinding of supply issues that shocked the market in early 2019. Major Australian players Rio Tinto and BHP have reported increased shipments of ore to Asian markets.
  • Gold had another consistent month, growing 1.2 per cent to close at a spot price of US$1,510 per ounce. This growth has continued through the geopolitical and macro-economic issues that have rattled global investor sentiment. The US- China trade conflict has continued, there are major protests in Hong Kong, and Brexit and US recessionary fears have pushed investors to the gold safe haven to combat global uncertainty. Monetary easing and global interest rate cuts have also resulted in nervous investors leaving bond markets for the gold market, holding price pressure on the metal.

Performance of WA Index and global indices

Performance of WA Index and global indices
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October showed mixed results for global indices, which were led by a five per cent surge in the Nikkei and a 2.4 per cent climb in the US S&P 500 following the easing of tensions in the US-China trade war. Growth was further aided by heightened foreign investment on the back of a weaker Yen, which bolstered support for Asian markets.

US markets were subject to the third consecutive cut to interest rates, which assisted in the quelling of recessionary fears of late. S&P yields have turned around and look to further benefit from monetary easing and progress towards a deal between the US and China.

The All Ordinaries finished October down by 0.4 per cent at 6,773. The decrease was driven by the response to result releases through the banking sector. In a similar vein, the FTSE 100 saw a 1.3 per cent drop which included a three per cent fall in Royal Dutch Shell’s shares following the release of its third quarter results.

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 a 24.2 per cent increase in its market capitalisation from $766m to $951m. In October the gold producer bumped its stake in EganStreet Resources Ltd up to 31.5 per cent, in line with the extension of its takeover bid to December 2019. Additionally, the announcement of the company’s decision to develop its shallow, high-grade ore resource at its Santa Underground Mine, expected to have a 257kt reserve of high-grade ore played a pivotal role in the advancement of the share price this month.
  • Perseus Mining Ltd increased its market capitalisation by 22 per cent from $818m to $999m upon meeting production guidance for the 11th consecutive quarter. The West African gold miner announced a September quarter increase in production to the value of 3 per cent, whilst reducing its costs by seven per cent. October also saw the release of the company’s annual report, which outlined six per cent increase in gold production and commencement of its third mine in the course of edging closer to achieving annual gold production of 500,000 ounces.
  • Iluka Resources Ltd grew its market capitalisation by 17.7 per cent to $3,971m across the month of October. Although the mineral sands explorer steadily advanced from stronger commodity prices across October, the prior month end announcement of the commencement of its strategic review of operations at its mineral sands operations and Mining Area C royalty areas had the greatest impact on the stock. The release of strong quarterly results at the conclusion of the month further assisted the noted increase, which outlined a 17 and 19 per cent increase in mineral production and mineral sands production respectively.

Major index players in October 2019
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  • Cash Converters International Ltd enjoyed a 71 per cent surge in its market capitalisation from $86m to $148m on the back of the settlement of the Lynch Class action. Investors were quick to jump on its share register following the announcement of a settlement of the case, which has plagued the personal loan financer in previous months.
  • The announcement of a significant capital raising saw Stavely Minerals Ltd’s market capitalisation increase by 60 per cent to $284m. The issue of 19.6m shares at a price of $1.00 per share to fund exploration at the gold miner’s nada copper-gold project in Western Victoria was a key contributor towards the rise in the company’s stock price. October also saw the continuation announcing exceptional diamond drilling results at its Gossan Porphyry Copper–Gold project.
  • The market capitalisation of Phylogica Ltd increased by 41 per cent to $151m during the month of October led by an entitlements offer to raise $26.8m. Investors reacted positively to the announcement of the company’s transition from a drug delivery company to a drug development company. The encouraging October performance was also supported by the announcement of a partnership with the Lions Eye Institute, which will see the healthcare provider positioned to independently take drugs to the market.

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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