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Deloitte WA Index’s tough run continues as global fears intensify

9 October 2015: The Deloitte WA Index dropped during the month of September, with the market capitalisation of Western Australian listed companies decreasing by 6.4% to close the month at AU$118.5bn.

The Deloitte WA Index has now dropped a staggering 20.6%, or AU$30.8bn, since 30 June 2014.

Deloitte Clients & Markets Partner Western Australia, Tim Richards, said falling prices of key commodities and continued global equity market jitters weakened the Index during the month.

“September saw anxious investors initiating sell-offs in equity markets amid growing concerns of a slowing Chinese economy, and an expected interest rate hike by the US Federal Reserve,” Mr Richards said.

“This continues a lengthy tough run for the Deloitte WA Index, which despite an 8.4% boost from the listing of South32 Limited in May this year, has overall dropped a total of AU$30.8bn since mid-last year.”

Among the major Index players:

  • Woodside Petroleum Limited’s market capitalisation fell $2.7bn during the month following news that gas producer Oil Search Limited had rejected its $11.6bn all-share takeover offer.
  • Liquefied Natural Gas Limited shares closed at $1.28 (a 54.3% decrease) due to the flailing oil price which subsequently led them to drop out of the top 10 WA Index companies, finishing the month at rank 16.
  • Amid the turmoil, Northern Star Resources Limited bucked the trend increasing its market capitalisation by 32.2%, through positive news that a new technology to significantly reduce electricity costs could be used at its Jundee Project, which helped them to climb the Index from 12 to seven during the month.
  • Independence Group NL rose seven spots to finish at nine after Sirius Resources NL backed the Company’s takeover early in the month.

Key commodities surveyed during September included:

  • Palladium and platinum which were the biggest movers, with palladium increasing by 15.4% to US$661 per ounce and platinum decreasing by 9.2% to US$917. An emissions scandal with Volkswagen diesel cars is expected to see reduced demand for diesel-powered cars, leading to weakened platinum demand (a major component in diesel car exhaust systems), while palladium has serendipitously picked up through its use in petrol powered cars.
  • Zinc which fell by 7.5% to US$1,671 per tonne, a five year low driven by weak demand from China. The downward trend continued in September on the back of news that Glencore is actively looking to sell off some of its zinc commodity inventories to reduce debt.
  • Tin which experienced a significant increase of 9.0% to finish at US$15,710 per tonne, after the Indonesian government gave its support to a ban on tin exports from the country, effective 1 October 2015.

All equity markets surveyed posted poor results for the month of September:

  • The All Ordinaries suffered a 3.1% decline, and fell below 5,000 points for the first time since 2013. The Index declined due to the major sell-offs in the resources sector, in particular for mining giant BHP Billiton Limited, which experienced a $15.8bn fall in its market capitalisation. Banking stocks were also not immune to the sell-off as the big four banks all finished in the red for the month, wiping in excess of $10bn from the local Bourse.
  • The FTSE 100 faced a similar fate, dropping by 3.0% largely impacted by investor fears surrounding a Chinese slowdown and falling prices of major commodities.
  • The S&P 500 followed the same trend, falling 2.6% with investors concerned about lulling emerging markets. The healthcare industry was the biggest contributor to the decline losing $152.26bn in market capitalisation, led by AbbVie Inc. (down US$13.24bn), Allergan plc (down US$12.57bn) and Merck & Co. Inc (down US$12.56bn).
  • The Nikkei posted the biggest decline of 8.1%, hitting an eight-month low. Japan’s Central Bank’s tankan survey revealed that corporate sentiment among the country’s major manufacturers deteriorated in the three months to September.

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The top Deloitte WA Index Movers and Shakers in September included:

Brainchip Holdings Ltd (BRN)

  • 528.9% (AU$166m) increase in market capitalisation, and moved from rank 179 to 42.
  • The Company completed a backdoor listing through explorer Aziana Limited on 22 September 2015. The Company aims to revolutionise the tech industry through computer chip technology that responds to stimuli in a similar manner to the brain.

Antares Energy Ltd (AZZ)

  • 455.6% (AU$98m) increase in market capitalisation, and moved from rank 217 to 64.
  • On 7 September 2015, the Company announced it had executed agreements with a private equity purchaser for the sale of project assets, Northern Star and Big Star, for US$148.8m and US$105.1m respectively.

Lucapa Diamond Company Limited (LOM)

  • 121.1% (AU$53m) increase in market capitalisation, and moved from rank 138 to 77.
  • The diamond miner’s shares climbed after the release of an independent research report, Resource Speculator, which recommended the Company as a “buy”. This report followed a recent announcement revealing the quantity of large special diamonds (weighing more than 10.8 carats) being recovered from its Lulo diamond project in Angola.

WA’s Top 100 Listed Companies
WA’s Top 100 Listed Companies – at 30 September 2015, ranking 1-25
WA’s Top 100 Listed Companies
WA’s Top 100 Listed Companies – at 30 September 2015, ranking 26-50
WA’s Top 100 Listed Companies
WA’s Top 100 Listed Companies – at 30 September 2015, ranking 51-75
WA’s Top 100 Listed Companies
WA’s Top 100 Listed Companies – at 30 September 2015, ranking 76-100

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