Archive for the ‘SHARES STOCKS BONDS’ Category

HISTORICAL CHART – On the precipice: Will global markets follow commodities off the cliff?

Tuesday, August 25th, 2015

chart-market-to-follow-commodities image

From 1970 to 2004, commodities moved the opposite direction of assets like equities and bonds. For example, it was during times such as the 1990s that cheap inputs like oil and metals helped to fuel growth in industries across the globe.

When the oil price spiked, like in instances such as the Iranian Revolution and the subsequent Iran-Iraq War in 1980, the market reacted accordingly. In that particular case, inflation jumped to 11.3% in 1979 and 13.5% in 1980, a US recession was triggered, and many economic sectors were hit hard.

However, as we see in today’s chart, from 2001-2012 commodities (as measured by the Bloomberg Commodities Index) have more or less kept in line with the S&P 500. This is historically unusual and many analysts expected it would not last. In 2012, commodities diverged in a big way.

Gold and silver were the first to drop off. More recently, it was base metals and oil that fell off the cliff because of slowing growth in China and supply gluts. Today, the Bloomberg Commodity Index and the TSX Venture Composite Index are lower than they have ever been since their inception. The former is down -19.9% from the beginning of 2001. The Venture is down -40.1% since then.

Today may be the end of this trend of divergence. US equities are at a precipice: fueled by low rates and quantitative easing for years, they have finally started to tumble from record highs. Yesterday, the Dow had its largest one-day drop since April 2014 as it slid 350 points. Even tech darlings were down as $49 billion in market capitalization was wiped out, with Apple, Google, Netflix, Facebook, and Twitter all getting crushed in trading yesterday. Market sentiment is decidedly worse than it has ever been in recent years with the tailwinds of Greece, Puerto Rico, China, and other problems.

Making predictions are the dumbest possible idea, but they say that fortune favours the brave.

So here are some bold predictions:

Gold will at least hold its current value, if not see gains in the upcoming six month. US equities do not see sizable gains for awhile. The Fed does not hike rates in September (or if they do, it will be to a lack of fanfare from the markets). Industrial commodities like base metals will continue to drop off a little further as the overall market feels like it has lost momentum and supply gluts remain supreme.

What do you think will happen in the short and medium term?


Henry Sapiecha

Allana Potash sold to Israel Chemicals for $137 million

Thursday, April 2nd, 2015

Allana Potash sold to Israel Chemicals for $137 million

Canadian junior miner Allana Potash Corp. (TSX:AAA) has agreed to be acquired by fertilizer giant Israel Chemicals Ltd. (ICL) after it failed to raise the capital it needed to remain as a standalone company.

The market reacted positively to the news as the stock was trading almost 44% higher at 47.5 Canadian cents in Toronto at 11:18 am

The $109.50 million takeover(or Cdn$137M), aims to speed up development of Allana’s promising Danakil project in northeast Ethiopia.

“Considering the generally challenging financial environment for junior mining companies, we would expect the short and long-term financing needs of Allana to include potentially significant dilution to Allana’s current shareholders,” Allana chief executive, Farhad Abasov, said in the statement.

ICL already owns 16.4% of Allana’s shares and the deal is expected to close by August 17

Danakil project location shows in below map

Allana Potash sold to Israel Chemicals for $137 million


Henry Sapiecha



Thursday, January 15th, 2015

Top 10 copper mines plunge $134 billion in value

It’s been a brutal two days on the copper market with prices falling nearly 10% since Monday.

Containing the losses to single digits was only thanks to a late recovery in New York on Wednesday.

Earlier in the day the price dropped 8% on the London Metal Exchange while losses in Shanghai could’ve been worse if the daily down limits on the Chinese exchange hadn’t been reached.

Many market observers (including your writer) believe prices won’t stay down at these levels which are the lowest since July 2009 – the height of the financial crisis.

Containing the losses to single digits was only thanks to a late recovery in New York on Wednesday

Between them the planet’s top ten producing mines have proven and probable reserves of 42.3 billion tonnes.

Contained metal at these 10 sites amount to 182.2 million tonnes.

Monday’s close at $6,130 a tonne on the LME to Wednesday’s end of day price of $5,548 a tonne (up from a stomach-churning $5,353 earlier) turns into a combined loss (or writedown if you will) of value at the mines of $133.8 billion dollars.

Of course these numbers represent money still buried in the ground, but it’s nevertheless a stark and sobering exercise to calculate just how much damage the red metal rout has done.

And how happenings on faraway futures markets can wreak havoc on (and under) the ground.

Top 10 copper mines plunge $134 billion in value


Henry Sapiecha

Hong Kong stock exchange to begin gold trading in Shanghai

Tuesday, December 16th, 2014

chinese gold dragon claw image

Members of the century-old Chinese Gold & Silver Exchange Society in Hong Kong should be able to start trading the yellow metal in Shanghai from March next year, allowing them to tap into mounting demand on the Chinese mainland, the world’s leading gold consumer.

The CGSE has been accepted by the Shanghai Gold Exchange as a strategic trading member, allowing CGSE members to do business on the main and international boards of the Chinese exchange, said Haywood Cheung, president of the CGSE.

Cheung said the CGSE was building a system to link into Shanghai trading, which was expected to be ready in March next year. Its members would be able to trade for themselves and for clients.

Physical gold traded on the Shanghai exchange and delivered into the mainland market is subject to full rebate of a 17-percent value-added tax, cutting the cost of imports.

The connection between the two exchanges will also benefit the CGSE’s plan to set up a trading floor and bonded warehouse for gold in a free-trade zone in Qianhai, in Shenzhen city of Guangdong province, home to thousands of jewelry makers.

The trading floor and a bonded warehouse able to hold 1,500 tons of gold would be ready in the first half of 2017, Cheung said. Before that, the CGSE would rent a three-story building in Qianhai as a temporary site to start trading and warehousing in March 2015.

“The Qianhai operations would increase China’s gold trade,” Cheung said, referring to imports and re-exports.

Sixty-eight out of 171 CGSE members have registered to set up operations in Qianhai to trade products listed on the exchange in Hong Kong, Cheung said.

They could take orders from clients on the mainland and overseas who held accounts in Qianhai at the exchange’s clearing banks, he said.

Mainland clients would be able to trade products priced in US dollars and Hong Kong dollars and foreign investors would be able to hedge yuan in their gold trades, Cheung said.

The exchange in Hong Kong currently trades gold and silver priced in the US dollar, Hong Kong dollar and yuan.

Foreign banks would be able to do inventory financing for gold in the Qianhai bonded warehouse, Cheung said. The CGSE would manage the warehouse and issue stock warrants.

Physical gold for the Qianhai trade would be imported through 15 banks currently authorized by Beijing as importers.

Henry Sapiecha

gold bar line

China’s upswing: Best investment vehicle to make money from.

Wednesday, December 10th, 2014

china_auto_vehicle-with lady image

While China is struggling with its gross domestic product (GDP) growth metrics, the country’s main stock market—the Shanghai Composite Index (SCI)—is easily outperforming the S&P 500 and NASDAQ.

China may be stalling, but the Chinese economy is still growing at a rate of more than seven percent—far better than the rest of the G8 countries. Now, of course, that’s if you believe the GDP reading that is put forth by the Chinese government; as with most data coming from China, it is up for debate whether it is real or fictitious.

But going forward on the premise that the GDP reading is accurate, you can understand that the potential for investment growth is significant.

The SCI is up 37% this year, easily outperforming the U.S. domestic stock markets. And now, with access to Chinese stocks traded on the two Chinese exchanges (the Shanghai and Shenzen)made possible from a hub in Hong Kong, the SCI has been edging higher.

Add in the fact that the country’s central bank, the People’s Bank of China, is continuing to pump easy money into the economic system, and you have the potential for more gains.

But to make the real money, you need to gain access to the “A” shares that trade in China, and not simply the American depository receipts (ADRs) that are listed on U.S. exchanges.

Investing in China’s “A” Shares

The iShares China Large-Cap (NYSEArca/ FXI) comprises the 25 largest companies in China but its performance has been substandard, moving up a mere three percent this year.

If you want access to the “A” shares listed on China’s exchanges, you can either buy them directly via an account in Hong Kong or via an exchange-traded fund (ETF) called the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF (NYSEArca/ASHR). The ASHR ETF comprises the 300 “A” shares that are listed on the two Chinese stock exchanges. These companies are the bread and butter of the Chinese economy.


You can look at the ASHR ETF as the equivalent of the S&P 500. The companies are diversified across the majority of sectors; hence, they provide ample diversification. The companies range from small-cap stocks to big-cap blue chips.

The largest sector is financials at 33.48%, followed by industrials at 13.87%, and technology at 9.61%. The holdings also have an attractive average price-to-earnings (P/E) multiple of 10.15 and a price-to-book ratio of 1.46, which is attractive compared to the S&P 500.

Here, you will find household names that you may not be familiar with you, but they are successful in China. Top companies include Ping An Insurance, China Merchants Bank, and Industrial and Commercial Bank of China.

by George Leong, B. Comm.

Henry Sapiecha

Cashing in on pork chops: Chinese supplier Wan Long to become billionaire on share sale

Thursday, July 31st, 2014


pork chop meat image www.foodpassions (2)

Meaty business: Wan Long’s stake in the business is valued at more than $US1 billion.

Wan Long, who runs the world’s biggest pork supplier, will become a billionaire when his company WH Group completes an initial public offering in Hong Kong.

WH Group is set to raise at least $US2.05 billion ($2.2 billion), based on data in its share sale prospectus. The company received enough orders for its sale of 2.57 billion shares at HK$6.20 each, people with knowledge of the matter said.

Wan owns 9.1 per cent of the Luohe, China-based meat packer through two holding companies, Sure Pass and Rise Grand. The stake is valued at more than $US1 billion, according to the prospectus.

Born in 1940, Wan joined WH Group’s predecessor Luohe Cold Storage in 1968, a decade after the state-owned company was founded in central China’s Henan province. He became the head of the factory in 1984.

The company is raising money to repay part of a $US4 billion loan that funded its purchase of Smithfield Foods, the biggest Chinese acquisition of a US firm so far. WH Group revived the share sale this month, after scrapping plans to raise as much as $US5.3 billion in April.

Fund managers placed orders for at least double the amount of stock available to them, according to sources who asked not to be identified. Individual investors subscribed for more than 55 times the number of shares in that portion, which accounted for 5 per cent of the offering, the people said.

The share sale would value WH Group at $US11.4 billion, about 11.5 times its estimated 2014 profit. Benny Liu, a Hong Kong-based external spokesman for WH Group, declined to comment.

BOC International Holdings and Morgan Stanley have been arranging the offering.

Henry Sapiecha

Fortescue Metals plans to expand its markets beyond China

Friday, July 4th, 2014

fortescue-metals-looks-to-expand-markets-beyond-china image

Australia’s third biggest iron ore miner Fortescue Metals Group (ASX:FMG) is expanding its customer base beyond China as concerns over the use of commodities as collateral for loans in the Asian giant has sparked recent volatility in prices for the steel making material.

fortescue-metals-looks-to-expand-markets-beyond-china-chart image

The company’s CEO, Nev Power, told The Age Fortescue had started supplying customers in South Korea, and wanted to test Japan and other Asian markets next.

Despite Power’s confidence, the company stock got hammered Wednesday, as Sydney-based investors rushed to sell off iron ore miners fearing of a further fall in the commodity price, which is currently trading at about US$106 a tonne.

Fortescue shares fell 3.5% to close at $4.63. Of more concern is the fact that the stock has now fallen over 20% this calendar year, basically mimicking the drop in iron ore spot prices.

Worries over an economic slowdown in China — the world’s largest iron ore importer — have contributed to the industrial metal’s 21% drop so far this year, placing the commodity firmly in bear market territory.

Speaking at the Macquarie Australia Conference, Power said he expected the current volatility in iron ore prices to blow over soon. He added there already are some positive signs, such as the joint US$1bn bid by  China’s Baosteel and Aurizon (ASX: AZJ) for Aquila Resources (TSE, ASX: AQA), which he considers a vote of confidence in the Australian mining industry and the iron ore market.

Henry Sapiecha


Saturday, November 9th, 2013



Despite market conditions and endless reports announcing the end the so-called mining boom, Australia’s iron ore miners managed to add over $65 billion to their value this financial year, reports The Australian.


The gains come as iron ore prices have defied expectations, remaining above $130 a tonne, and confidence grows in the strength of prices of Australia’s biggest export.

The steel-making material is up 23% from its 2013 lows struck at the end of May, as Chinese spending on infrastructure boosted Australian iron ore exports to record highs.

The price surge has benefitted giant and medium producers alike. BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO), for instance, have seen their shares jumping 25% and 21% respectively.value-of-aussie-iron-ore-miners-up-65bn-this-year-stock-comparison


But the is rest of Australia’s iron ore players, which seem to be the big winners. Mount Gibson Iron’s (ASX:MGX) has gained a whooping 111% since June 30, Arrium’s (ASX:ARI) has climbed 93% and Fortescue Metals Group (ASX:FMG) has risen 92%.

The iron ore price revival comes after a recent report from the World Steel Association showed global crude steel production in September rose to a rate of 4.42 million tonnes per day — a strong 4.6% month-on-month surge and 6.1% jump over last year’s figures.


Henry Sapiecha

fine gold line


Tuesday, November 6th, 2012



Canada’s economy shrank 0.1% in August, the first drop in six months, driven mainly by depressed manufacturing and energy sectors, Statistics Canada said Wednesday.

Hardest hit were mining and oil extraction operators, with the sector shrinking 0.7% Excluding oil and gas extraction, mining fell 2.8%. Metal ore mining declined 4.7% as a result of decreased output at copper, nickel, lead and zinc mines as well as at gold and silver ore mines.

Statistics Canada said scheduled maintenance affected metal ore output in August, while non-metallic mineral production fell 2.6% as a result of decreases in output at potash mines.

Oil and gas extraction declined 0.4%, as a drop in crude petroleum production outweighed an increase in natural gas extraction. Maintenance activities at some oilfields affected crude petroleum output in August, the statistics agency said.

Overall, StatsCan noted shrinking output in 10 out of 18 industrial sectors.

Sourced & published by Henry Sapiecha


Saturday, November 3rd, 2012



The price of December gold plummeted by more than $20 an ounce within minutes, crashing through the psychologically important $1,700 level on Friday after data showed a much better than expected increase in the number of US jobs created in October.
Gold Company

The precious metal continued to weaken throughout the session and after touching a low of $1,675, gold futures settled at $1,678, down $37 or 2.1% on the day.

Gold has now lost 6.5% or more than $110 of its value over the past month as continuing good economic news out of the US boosts the dollar and diminishes gold’s allure as an inflation hedge and storer of wealth.

The jobs report may mean that the Federal Reserve will end its QE program to keep interest rates low and flood markets with cheap money sooner rather than later.

The employment data is also the final chance voters have to assess Barack Obama’s record on the economy before next week’s US presidential election.

The outcome of the vote could have a big impact on gold – most analysts believe a win by Republican challenger Mitt Romney could spell disaster for the fortunes of the yellow metal
Ka Gold Jewelry

Sourced & published by Henry Sapiecha