WA Index


WA Index

Issue 170 | November 2017

Welcome to the 170th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

Download the list of WA’s top 100 listed companies, as of 31 October, explore the sections below and if you don’t 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 Angela McIlroy.

As of 31 October 2017

Commodity review

October commodity prices experienced a mixed month, balancing supply and demand pressures from China as government restrictions continue to affect mines and factories. Nickel stepped out in front this month, boosted by anticipated opportunities from electric-vehicle growth, while crude oil was bolstered by Saudi support for extended OPEC output cuts. Electricity demands pushed up the prices of thermal coal, while coking coal and copper prices fell as concerns for reduced steel production grew.

Nickel led the base metals this month, strengthening 11.7% to US$11,630.50 per tonne at the end of October. A positive wave of investor sentiment has driven the price per tonne higher as it anticipates that demand from electric-vehicle batteries, for which nickel sulphate is a key ingredient, will offer opportunities for price growth.

Copper regained ground lost in September, rising 6.3% to $6,839.00 per tonne at the end of the month. The driver of the increase is based on expectations of strong demand from China, the largest consumer of the metal globally, combined with continued restrictions on polluting mines and smelters in China depressing domestic supply.

Crude oil rose 5.0% to US$60.44 per barrel during October. Prices were bolstered by Saudi Crown Prince Mohammed Bin Salman’s backing of an extension of OPEC output cuts beyond March 2018, following Russia’s stated openness to extend cuts to the end of 2018. Production in the US fell sharply at the beginning of the month, with 92% of oil production facilities in the Gulf of Mexico shut down as the area braced for Hurricane Nate. While the storm impacted stockpiles, infrastructure remained largely unscathed and operations were restored during the month.

Thermal coal prices increased by 4.7% to $99.40 per barrel at 31 October 2017, supported by increased Chinese demand for the fuel. The nation’s electricity requirements surpass the presently viable renewable energy options, and their own supply of the commodity is currently restricted by the government’s pollution crackdown. Delays in the nuclear energy uptake in South Korea has additionally increased demand for coal in the meantime.

In contrast, coking coal fell 3% during the month to finish on $159.00 per tonne. With investors worried about the impact steel production limits in China would have on winter demand, China’s steel industry grew at its slowest in six months. Further, the reopening of several Chinese coal mines in the next month is expected to bring down domestic prices as well.

Iron ore prices also continued to feel the impact of the Chinese steel production, dropping by 3.7% to US$60.00 per tonne in October. With government restrictions still tightening on environmental pollution, Chinese demand has stalled with increasing steel mill production cuts across the country.

Commodity and Precious Metal Prices

Select above image to enhance the Commodity and Precious Metal Prices
Select above image to enhance the Commodity and Precious Metal Prices

Performance of WA Index and global indices

Select above image to enhance the Performance of WA Index and global indices
Select above image to enhance the Performance of WA Index and global indices

WA Index movement

Select above image to enhance the WA Index movement
Select above image to enhance the WA Index movement

The Deloitte WA Index grew strongly during October as the market capitalisation of Western Australian listed companies increased by 3.4% to close the month at AU$167.5bn.
Deloitte Clients & Markets Partner - Western Australia, Tim Richards, said: “The WA Index has returned to positive growth following a retraction in line with the All Ordinaries Index in September. The commodity stock-heavy WA index has noticeably benefitted from the global demand for lithium as investors look to claim their stake in what has been coined the upcoming lithium boom.”
“In the context of a global economy trending towards electric cars in the eye of sustainability, the demand for lithium could very likely spell boom time for the Western Australian economy. Current levels of demand have led to exponential increases in the share price of what were once penny stocks on the WA Index. Whether or not bullish demand for lithium will be outstripped by its supply will play a pivotal factor in the longevity of sustainable growth in the WA Index for years to come.”

Among the major index players in October:

  • Galaxy Resources Ltd continues to thrive amid the global-scale hype surrounding lithium and the future role it is expected to play in sustainable energy. Bullish demand and positive forecasts for lithium has seen Galaxy’s share price reach a yearly high of $4.20, with market capitalization increasing by AU$344m (32.7%) in the month of October alone. Galaxy reported strong results for the quarter ended 30 September 2017, which included positive cash flows of $17.0m in tandem with noteworthy increases in production and lithium concentrate sales to the value of 43% and 39%, respectively
  • Pilbara Minerals Ltd’s market capitalisation increased by AU$320m (32.4%) upon the finalisation of a binding lithium off-take deal with one of China’s largest automotive manufacturers; Great Wall Motor Company. The lithium and tantalum producer is set to further benefit from Great Wall’s $28 million equity investment in Pilbara, with the proceeds set to assist with completion of Stage 1 of its Pilgangoora project development. Pilbara received the final environmental tick of approval needed to complete construction and facilitate ongoing operations for this project as it edges closer to becoming one of the world’s next significant lithium producers
  • Independence Group NL saw its market capitalisation increase by AU$323m (15.9%) during the month having put pen to paper on a joint venture agreement with Rumble Resources Ltd on its highly prospective Fraser Range projects. The leading base metal and gold miner is set to earn 70% equity in Rumble’s 100% owned Fraser Range tenements. October also saw the granting of an additional 3,245km2 of Lake Mackay JV tenements, from which the Group and its JV partner in ABM Resources NL will be permitted to extend exploration from 1 to 13 tenements.

The equity markets surveyed posted strong results during October:

  • The All Ordinaries experienced a solid month, having increased by 4% on the back of strong performance in the banking and mining sectors. CBA, Westpac and NAB all added between 3-4%; ANZ saw lower growth at 1.1% whilst Macquarie jumped up 8.2%. The big miners saw healthy growth, with BHP and Rio Tinto up 3% and 4.4% in October, respectively. In contrast Fortescue Metals Group lagged badly in the month, falling 9.7% due to its exposure to weakening iron ore. Increased confidence in the local market has enticed investors back into the market with the Australian market finally responding to the now widely recognised broadening in the global recovery
  • Large tech stocks were the primary drivers behind the US S&P 500 closing 2.2% up at the end of October, with more than half of the month’s solid gains attributable to just five tech stocks. Gradual improvements in inflation, consumer and business confidence in conjunction with tax reform have all further propelled the S&P 500 to its longest string of weekly gains since 2014
  • October saw the FTSE 100’s best monthly performance since May 2017, having risen by 1.6% amidst ravenous global appetite for equities. The index was bolstered by strong earnings updates, led by oil major BP which gained 2.2% and posted a third quarter profit figure double of what was achieved in Q3 of 2016. A share buyback is to follow later in the year
  • Of most significance was the 8.1% increase in the Nikkei, with Japanese stocks scaling to a 21 year high at the close of October, with thanks largely due to the booming profits of Japanese exporters. The Japanese Yen hit a three-month low against the US Dollar, providing a lift to the Japanese exporter shares. These stock market highs reflect a global rally, echoing gains experienced throughout international equity markets.
LED board

Top performers of the month

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

Top performers of the month

Top performers of the month

Top performers of the month

Top performers of the month

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

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

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

  • The share price of Australian Mines Ltd skyrocketed by more than 600% during October. Despite an ASX price and volume query, Managing Director Benjamin Bell outlined that the diversified metals explorer’s market capitalisation had exceeded the threshold of AU$100m required by some London-based funds to invest in a company. As a result, these large institutional investment funds have been buying into Australian mines prior to the commencement of the Company’s UK roadshow in anticipation of continued price increases
  • As illustrated by its latest results, the potential for the Manono Lithium Project to become the largest hardrock source of lithium in the world has led AVZ Minerals Ltd’s share price to double during October to $0.38 at the end of the month. Earlier in the month the company signed a Memorandum of Understanding for potential investment and off-take opportunities, with Shanghai Greatpower Industry Co. Ltd, an integrated commodity group focus on sourcing and producing battery raw materials and products for the Chinese battery sector
  • Following on from the landmark announcement of “Witwatersrand-style” and “conglomerate-hosted” gold discoveries in the Pilbara Region in July, more than 33 million Artemis Resources Ltd shares have changed hands with the junior miner’s share price rising to a closing high of AU$1.31. October saw an AU$12m capital raising to fund Pilbara exploration, with diamond drilling at Purdy’s Reward underway and large diameter drilling expected to commence towards the end of this month.
Elevator Reflection

WA Index Feature Articles

2017-18 Western Australian Budget Briefing Note

The new State Treasurer, Ben Wyatt, handed down his first Budget on 7 September 2017. Few WA Treasurers have inherited a worse set of books. The new State Government has had to make a number of difficult decisions to continue the process of repairing the WA State Budget.

Download the full report.

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.

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