SP Angel . Morning View . Friday 19 06 20
New demand for steel in China drives iron ore higher
MiFID II exempt information – see disclaimer below
KEFI Minerals * (LON:KEFI) – Tulu Kapi project finance on track for Oct/20 closure and full construction start in Q1/21
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SP Angel . Morning View . Friday 19 06 20
New demand for steel in China drives iron ore higher
MiFID II exempt information – see disclaimer below
KEFI Minerals * (LON:KEFI) – Tulu Kapi project finance on track for Oct/20 closure and full construction start in Q1/21
Ncondezi Energy (AIM:NCCL) – Project update
Norilsk Nickel (LON:MNOD) – Strategic withdrawal from Australia to focus on Russia
Petropavlovsk (LON:POG) – Secondary listing in Moscow
Versarien (AIM:VRS) – New non-executive Chairman appointed
Iron ore and steel prices rise in Chin driven by new local and national infrastructure projects
China is restoring and ramping up growth in its economy through the funding of new local and national infrastructure projects.
New demand for rebar, hot-rolled coil and stainless steel is driving domestic Chinese prices higher
We expect many related base metals and other commodity price to follow.
Coronavirus – medical experts claim to have brought the Beijing Coronavirus outbreak under control
Johnson & Johnson in talks with governments on possible COVID-19 vaccine
New Coronavirus outbreaks in Beijing, Germany and the US are a concern though no unexpected
The UK The National Institute for Health and Care Excellence, announced a ‘rapid evidence review’ looking into the connection between Vitamin D and COVID-19 mortality rates.
Very low infection rates in Zambia potentially indicate that the nation’s extensive BCG vaccination program may be serving to protect the population. This is backed up by data from local mining companies which have been rigorously testing their employees and management.
Staff at third UK meat factory tests positive for Coronavirus
The factory serves KFC, M&A, ASDA and others (Daily Mail)
Government to allow holidays in Wales from July 6th for self contained accommodation – you never knew a caravan in Pontypridd could be so attractive
Airbridges may be announced today to European destinations from 4th July, probably to France, Spain, Portugal and Greece.
Ireland, new Pub rules restrict drinkers to two hours including food – There is going to be some very fast drinking going on!
Stimulus funding (government announcements)
$304bn – China Ministry of Finance has issued Rmb550bn (US$77bn) of special purpose debt
+ another Rmb1,600bn (US$226bn) is available for issue before the year end. Much of this will be for housing and connecting infrastructure
$140bn – China PBOC buying CNY1tn of bank loans issued by local lenders to small firms this week in an effort to ease the flow of credit.
$56bn – The PBOC also announced a Rmb400bn ($56bn) purchase loan program to boost available credit by supporting bank loans to small businesses.
$1.55tn – China – Bloomberg estimates a ‘fiscal impulse of more than 11% of nominal GDP’ which was estimated at US$14.14tn
We have previously assumed China at $909m comprised $344bn of China stimulus + $565bn in special bonds for infrastructure by local authorities
$2tn – US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
The House passed a $484bn aid package to rescue small small businesses, hospitals ($75bn) and coronavirus testing ($25bn).
$2tn US – Trump looking at $2tn infrastructure fund
$700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE to buy Treasuries and mortgage-backed securities.
US Fed may soon start buying in up to $750 billion of corporate debt and ETFs
US Fed has flooded all markets with dollar liquidity through repo and swap lines.
US$1.02tn – Japan – BoJ injecting US$1.02tn into the economy through a variety of programmes. (will check if this is in addition to the Y117tn stimulus announced)
US$1.1tn – 117tn-yen stimulus, funded partly by a second extra budget, will be on top of another 117tn package already rolled out takes total spending in Japan at 234tn yen ($2.18tr) – 40% of Japans GDP. Japan to issue Y31.9tn in government bonds.
$825bn (EUR750bn) EU – European Commission aid package yesterday aimed at supporting EU nations hit by the pandemic.
This is an expansion on the previous $543bn (EUR500bn ) EU Crisis Recovery fund backed France and Germany + $963bn (EUR750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around EUR250bn
EU Finance Ministers have so far failed to agree on a strategy to mitigate the economic impact of the pandemic.
The pandemic emergency purchase programme (PEPP) and asset purchase programme (APP) have been reiterated with a cap of EUR750bn and EUR120bn, respectively.
The bank is reported to have used EUR100bn of the PEPP so far.
$825bn (EUR756bn) Germany – Bundestag approved EUR156bn in extra borrowing and ~EUR600bn in emergency funds
$298bn Japan parliament passed JPY31.9tn ($298bn) second extra budget today to help struggling economy.
JPY117tn stimulus programme + JPY10tn as a coronavirus reserve fund
$934bn (GBP745bn) – UK Bank of England injects another GBP100bn ($125bn)
$387bn (EUR304bn) France, $200bn (EUR200bn) Spain, $214bn (A$320bn) Australia – RBA ready to buy bonds again.
US$260bn – India representing 10% of GDP.
$62bn – South Korea – The government unveiled a 76tn won ($62bn) “New Deal” aimed at supporting the economy amid the pandemic focused on creating jobs and new industries through 2025. South Korea – New Deal will create jobs and foster new industries like 5G.
$13.3bn – Saudi Arabia central bank will inject 50bn riyals ($13.3bn) into the banking system on top of US$43.7bn already pledged
$78bn (C$107bn) Canada, $32bn, Singapore, $22.6bn India, $19.3bn HK, $13.7bn South Korea, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, Philippines further $26bn proposed, Indonesia – adding $43bn, Thailand creating a corporate bond fund.
South African buys ZAR10.2bn (US$119m) government bonds in May. Argentina to default on $10bn of dollar debt issued till the end of the year.
$1,000bn – IMF available + $12bn World Bank,
>15.9tn – Total stimulus reported. Figures may include some political double counting and some funds may not be spent
Gold sector interview with interactive investor
IG TV interview on Mining Sector prospects with SP Angel analyst.
MiFID II exempt information – see disclaimer below
Dow Jones Industrials
HK Hang Seng
China plans to step up purchases of US farm goods
Foreign direct investment fell 3.8%ytd in May and -6.1% yoy
China is planning to step up purchases of US farm goods to comply with the Phase-1 trade deal following the talks in Hawaii this week, Bloomberg reports.
The world’s top soybean importer intends to step up buying of everything including soybeans, corn and ethanol after purchases fell behind due to coronavirus disruptions.
EU – Euro Zone Current Account Balance EUR 14.4bn for April vs 27.4bn previously
new car registrations fell 52.3%yoy in May vs -76.3% in April
Sweden – Unemployment rose to 9% in May vs 8.2% in April
European banks take up EUR1.5tn of low-interest ECB loans.
EU plans to impose full customs controls and checks on goods from the UK starting next year
UK – Bank of England injects another GBP100bn ($125bn) to protect fragile economic recovery
BoE leaves rates unchanged
CPI rose to 0.5% in May vs 0.8% in April
CPI is 0% yoy in May vs -0.2% in April
PPI inputs rose 0.3% (-5.5%), yoy -10% (-10.2%),
PPI outputs declined 0.3% (-0.8%), yoy -1.5% (-0.7%).
US – Fed’s Bullard – Economic Recovery Seen Faster 2008-09 Crisis Recovery, But Depends On The Virus
Fed’s Mester reckons it could take a year or two for the US economy to return to pre-pandemic levels, with the gross domestic product declining by 6% in 2020 and the unemployment rate still around 9% by year’s end (Reuters)
US Treasury yields fall further on prospects for slower recovery from the Coronavirus
US housing starts rose 4.3% in May at 0.97m units vs -26.4% at 0.934m units in April
Building permits rose 14.4% to 1.22m units in May vs -21.4% at 1.066m units in April
Jobless claims rose to 1.542m in May vs 1.508m in April
Philadelphia Feb index recovered +27.5 for June vs -43.1 in May highlighting the strength of the US recovery so far
US rmployers hired a record 2.5m workers in May as businesses reopened
US unemployment remains at some 29m
Australia – Unemployment rose to 7.1% in May vs 6.4% in April
Employment fell 227.7k vs -607k in April
Participation rate of 62.9% in May vs 63.5% in April
Lower oil prices are helping the global recovery as rising inventories hold oil prices down
400 workers tested positive for the coronavirus at an abattoir in Germany (Reuters)
Robinhood App and website attracted 20,000-50,000 new users per day according (Bloomberg)
The App was created by the founder in his spare time at university in Indiana, US at the age of 21.
The system uses stock ownership data for insights into retain investor holdings and trading.
Thailand – Domestic car sales fall 54.12% YoY
Car sales in Thailand fell for the twelfth straight month in May, down 54.12% from a year earlier to 40,418 vehicles.
UK – Government debt exceeds 100% of GDP for first time since 1963
Borrowing stood at GBP55.2bn last month as spending surged and tax revenue plunged, the Office for National Statistics said on Friday.
This latest figure brings the total borrowed since the start of April to GBP103.7bn, the biggest two-month total on record (Bloomberg).
The increase reflects the cost of the Chancellor’s interventions to help prop up the economy, including paying wages for almost 12m jobs and more stimulus including tax breaks.
The money owed to the holders of gilts, national savings and creditors of Network Rail- exceeded GBP2tr for the first time ever in May (FT).
The figures show the level of public borrowing to be on course to end the financial year about GBP300bn in the red, twice as bad as the worst year in the GFC and about 15% of national income.
Dollar heading for best weekly gain in a month
A resurgence in coronavirus cases, mainly in China and Germany, has knocked confidence in a rapid economic recovery and drove investors to the safety of USD (FX Street).
The dollar index is trading near a two-week high and has gained about 0.3% for the week (Reuters).
Baltic index sees best day ever as vessel rates surge
The Baltic Exchange’s main sea freight index saw its largest single-day percentage rise on Thursday.
The Baltic dry index, which tracks rates for ships carrying bulk commodities, rose 22.6% to 1,527- its highest since the 10th of December.
The Baltic Capesize index jumped 49.6% to 3,672- its highest since the 25th of September (Reuters).
India – China cut roads into Himalayan mountain and may have dammed river (Reuters)
Hindu festival cancelled for first time in 284 years
US$1.1215/eur vs 1.1242/eur yesterday. Yen 106.90/$ vs 107.20/$. SAr 17.403/$ vs 17.225/$. $1.243/gbp vs $1.252/gbp. 0.686/aud vs 0.687/aud. CNY 7.076/$ vs 7.078/$.
Gold US$1,739/oz vs US$1,735/oz yesterday – Gold rangebound this week on virus concerns and dollar strength
Gold prices edged higher on Friday morning, as demand was supported by concerns over a second wave of Covid-19 infections.
Spot gold rose 0.2% to $1,726/oz this whilst US gold futures also rose 0.2% to $1,735/oz earlier this morning (Reuters).
The price of gold has fallen 0.3% so far this week, as concerns over a Covid-19 second wave have been countered by dollar strength and economic recovery hopes.
Gold ETFs 100.9moz vs US$100.9moz yesterday
Platinum US$821/oz vs US$823/oz yesterday
Palladium US$1,922/oz vs US$1,945/oz yesterday
Silver US$17.59/oz vs US$17.62/oz yesterday
Copper US$ 5,799/t vs US$5,770/t yesterday – China refined copper output rose 13.3%mom (853kt) to 3.97mt up 2.7% YTD (China Bureau of Statistics)
Refined zinc output rose +4.5% to 514kt or up 9.1% to 2.53mt YTD
Refined lead rose +17.1% to 506kt or +1% 2.21mt YTD.
Aluminium US$ 1,586/t vs US$1,607/t yesterday – India may impose anti-dumping duties on aluminium products from China (NewsRise)
Nickel US$ 12,760/t vs US$12,900/t yesterday
Global nickel use in passenger vehicles was just under 3,000-tonnes in April vs with av global nickel usage of 178,000 tonnes per month in Q1 (FastmarketsMB)
Zinc US$ 2,037/t vs US$2,019/t yesterday
Lead US$ 1,796/t vs US$1,778/t yesterday
Tin US$ 17,180/t vs US$16,990/t yesterday – PT Timah expect sales to fall 18.8% to 55,000t vs 67,700t in 2019
Oil US$42.2bbl vs US$40.8/bbl yesterday
Natural Gas US$1.650/mmbtu vs US$1.640/mmbtu yesterday
Uranium US$33.15/lb vs US$33.15/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$103.05/t vs US$102.75/t – Iron ore prices continue to rise in China as demand for steel rises
Iron ore carrier scuttled at sea with 125,000t of iron ore still onboard
The Stellar Banner ran aground off the coast of Sao Luis, Brazil with 270,000t of iron ore on board
The salvage crew managed to recover 145,000t of iron ore before towing the ship into deeper water for sinking
The sinking of the ship may provide scientists with some interesting data on the impact of iron ore in the deep water environment
We believe iron is good for algal growth in surface waters which is also good for carbon capture and for feeding plankton and other organisms.
Iranian Mar-May iron ore production falls 2% YoY
Iran produced 7.96mt of iron ore in the first two months of the Iranian calendar (March 20- May 20)- 2% lower than the same period last year.
Similarly, the monthly iron ore concentrate output during the second month of this year has fallen 2% to 4.16mt.
Iran produced 47.31mt of iron ore in the previous Iranian calendar year (ending March 19), a 4% rise compared to the year before (Hellenic Shipping News).
Chinese steel rebar 25mm US$525.7/t vs US$525.7/t – Steel prices rise in China
Rebar, hot-rolled coil and stainless steel prices are all rising on new demand for regional and national construction projects in China.
Thermal coal (1st year forward cif ARA) US$54.0/t vs US$54.0/t
Coking coal swap Australia FOB US$114.5/t vs US$114.5/t
Cobalt LME 3m US$28,850/t vs US$29,000/t
NdPr Rare Earth Oxide (China) US$40,423/t vs US$40,423/t – Chinese terbium and dysprosium prices rise week-on-week
State-owned China Southern Rare Earth Group has raised the weekly listed prices for several rare earth oxides, including dysprosium oxide and terbium oxide (SMM News).
The price of terbium oxide rose 150,000 yuan/t to 4.45m yuan/t whilst dysprosium oxide was priced at 1.95m yuan/t- up 30,000 yuan/t from a week ago.
Lithium carbonate 99% (China) US$4,868/t vs US$4,868/t
Ferro Vanadium 80% FOB (China) US$29.5/kg vs US$29.5/kg
Antimony Trioxide 99.5% EU (China) US$5.0/kg vs US$5.0/kg
Tungsten APT European US$215-225/mtu vs US$215-225/mtu
Graphite flake 94% C, -100 mesh, fob China US$460/t vs US$460/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,350/t vs US$2,350/t
High toughness ceramics could be achieved using graphene
Brown University researchers have used graphene to improve the toughness and safety of solid electrolyte. (Phys org)
Solid electrolytes often fracture and corrode other parts of the battery. Ceramics might be a solution, but they are brittle. (New Atlas)
The researchers made tiny platelets of graphene oxide, mixed with a powder of LATP (a ceramic) and heated the mixture to form a ceramic-graphene composite.
Mechanical testing showed a two-fold increase in toughness (ability to withstand cracking) whilst the right amount graphene did not interfere with the electrical properties of the material.
The results show nanocomposites could make solid electrolytes safer and usable in everyday applications.
The study was published in the journal Matter.
Umicore plant to manufacture cathode materials
Umicore will begin construction of a cathode materials plant in Nysa, Poland, with deliveries due to start from late 2020.
The plant will use proprietary production technologies to manufacture cathode materials for the European automotive market.
The plant is part of a EUR660m program announced by Umicore earlier this year.
The first phase of the facility has been part financed by the European Investment Bank who agreed a EUR125m loan agreement with Umicore earlier this week.
The Company penned a multi-year supply agreement for NMC cathode materials to serve LG Chem in September 2019. The supply agreement took effect form 2020 and outlines 125,000 metric tonnes to be delivered over several years.
Once completed the site at Nysa will supply Umicore’s battery cell and automotive customers.
Ford to install hands-free option in its new electric Mustang Mach-E vehicle (Bloomberg)
We have to wonder if anyone buying a Mustang will ever want to take their hands off the wheel.
KEFI Minerals * (LON:KEFI) 0.98p, Mkt Cap GBP18m – Tulu Kapi project finance on track for Oct/20 closure and full construction start in Q1/21
The Company provided a general update on Tulu Kapi development project as well as financing discussions.
The team highlighted Tulu Kapi remained on track for project finance closure in October 2020, full construction in Q1/21 and the start of gold production in 2022.
No cases of coronavirus have been reported in the Tulu Kapi district to date.
With regards to the situation in the country, the Ethiopian Parliament extended the deadline for the next elections by up to 12 months to August 2021 last week amid the global coronavirus pandemic.
Development wise, the team is reporting that the road to new host lands for Tulu Kapi residents is currently being built ahead of the resettlement start.
Security has been significantly expanded in the Mine License Area and in the surrounding district.
Following geotechnical drilling completed in Q1/20 and updated processing plant fabricators’ prices received, principal contractors Lycopodium updated process plant Front-End-Engineering-and-Design.
The team has narrowed down capital cost estimates and opted for a straightforward bank debt as opposed to previously considered infrastructure bond that in turn yielded significant savings reducing funding needs to $221m, down from $242m.
Development capita cost of $221m includes processing infrastructure expenses ($110m), mining infrastructure ($27m), off-site infrastructure ($20m), owners’ costs ($45m) and interest during construction and other finance effects ($19m).
Adjusting for all updated input costs, the Company estimates Tulu Kapi (open pit + underground) to generate NPV8% (after tax) of $363m/GBP290m at $1,600/oz gold price ($163m/GBP131m for planned KEFI 45% interest in the project).
Open pit only scenario for ~140kozpa over eight years and AISC of $856-884/oz generates 45% IRR at the $1,600/oz gold price
Funding sources include $111m in project equity (including subordinated debt and offtake-linked facilities) and $110m in senior secured infrastructure finance.
Regarding the latter, the Company signed a term sheet with two African development finance institutions (Eastern and Southern African Trade and Development Bank and Africa Finance Corporation).
Regarding the $111m project level equity, the Company is in discussions with ANS Mining regarding their participation in the project ($38m agreed previously) that is expected to be clarified this month.
The Company reports that partners to the project also discuss other sources of funding that involve local institutions and international mining-experienced investors and offtake specialists to close the funding and finalise the structure.
Conclusion: The Company updated project economics data highlighting attractive returns further supported by strong gold price environment ahead of agreeing the senior secured infrastructure loan and equity part of the funding with finance closure targeted for October 2020.
*SP Angel act as Nomad and Broker to KEFI Minerals
Ncondezi Energy (AIM:NCCL) 3.35p, mkt cap GBP14.7m – Project update
Ncondezi Energy has provided a progress report on its plans for the development of an integrated 300MW coal fired power plant in Mozambique.
In agreement with Mozambique’s EDM, the company is progressing further studies including a transmission integration study and national power market outlook study which are expected to be completed during Q3 2020.
The company expects these studies to facilitate finalisation of the tariff agreement during H2 2020.
Ncondezi Energy is also expecting to conclude a ?Shareholders Agreement Term Sheet … in the coming weeks? and to sign an EPC (Engineering Procurement and Construction) contract during Q3 2020.
CEO, Henno Pengilly, explained that the further studies ?should verify certain technical assumptions and provide greater certainty around the business case for the Project alongside the tariff proposal? although he pointed out that the additional studies ?are expected to add at least 2 monthe to the Project development programme moving the tariff agreement into H2 2020.?
Conclusion: Further studies currently underway are expected to improve the business case for the development of a 300MW integrated coal-fired power plant in Mozambique. Although they will extend the timetable by approximately 2 months, overriding delays arising from the Covid19 pandemic should, in part, be used to complete the studies.
Norilsk Nickel (LON:MNODI) US$27.35, Mkt Cap US$34,639m – Strategic withdrawal from Australia to focus on Russia
Norilsk Nickel has announced that, subject to regulatory approvals, it is disposing of its interest in the Honeymoon Well nickel project in Western Australia to its partner, BHP, for an undisclosed amount.
?The Project located in Western Australia encompasses Honeymoon Well, a greenfield nickel development, as well as Albion Downs North and Jericho Joint Ventures, both exploration projects where BHP currently owns the remaining 50% stake.?
Norilsk Nickel explains that the strategic disposal of its last remaining Australian asset will ?reinforce our focus on the development of our Tier-1 asset portfolio in Russia?.
Petropavlovsk (LON:POG) 28.4p, Mkt Cap GBP927m – Secondary listing in Moscow
Petropavlovsk reports that it has formally applied for its shares to be listed on the Moscow Exchange in addition to retaining its primary listing in London.
The company explains that it expects its profile, liquidity and trading volumes to be enhanced by making its shares available to a more diverse group of investors some of whom are ?not currently present and, in some cases, unable to purchase shares in London?.
?The Company will not be placing or issuing any new shares in connection with its application for a secondary listing and no action is required by the Company’s existing shareholders?.
Conclusion: Petropavlovsk is seeking to diversify its shareholder base via a secondary listing in Moscow.
Versarien (AIM:VRS) 48p, Mkt cap GBP81m – New non-executive Chairman appointed
James Steward CBE has been appointed as the new non-executive Chairman at Versarien.
Stewart is currently Managing Partner of Menlo Partners LLP, an investment and advisory company which focusses on technology companies active in the UK and China.
James was formerly a partner at ECI Partners LLP a long established private equity fund managers, where he was involved in a wide range of investments.
James also previously worked for Arthur Andersen’s management consultancy division and as investment director at Rothschild Ventures Limited.
Versarien continues to develop graphene for the testing and enhancement of a variety of applications ranging from batteries to wearable technology.
Graphene’s strength alongside its thermal and electrical conductivity means the material may well enhance many of the products where it is being incorporated.
*SP Angel act as nomad and broker to Versarien
John Meyer – [email protected] – 0203 470 0490
Simon Beardsmore – [email protected] – 0203 470 0484
Sergey Raevskiy –[email protected] – 0203 470 0474
Richard Parlons –[email protected] – 0203 470 0472
Abigail Wayne – [email protected] – 0203 470 0534
Rob Rees – [email protected] – 0203 470 0535
Prince Frederick House
35-39 Maddox Street London
*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Gold, Platinum, Palladium, Silver
BGNL (Bloomberg Generic Composite rate, London)
Gold ETFs, Steel
Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt
Natural Gas, Uranium, Iron Ore
Bloomberg OTC Composite
Lithium Carbonate, Ferro Vanadium, Antimony
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Live Stock Market News During the Coronavirus Pandemic
Apple said it was temporarily closing 11 retail stores across four states amid a surge in the number of coronavirus cases in those areas.
Stores will be closed in Arizona, Florida, North Carolina and South Carolina “with an abundance of caution,” Apple said in a statement. The closings come about one month after Apple started reopening outlets in the United States. The company closed most of its stores globally in mid-March when the pandemic started to take hold in the United States.
Earlier this week, Apple said it was going to reopen 10 stores in New York City. The stores are open “by appointment” for customers to pick up purchases or for repairs. Apple said more than 200 of its 271 U.S. retail stores have reopened.
Apple is not the only company shutting locations after reopening them. In Arizona, a chain of casinos closed its doors again on Thursday. Gila River Hotels and Casinos in Chandler, Ariz., had reopened on May 15 with new safety procedures in place. But with cases in the area still rising, the company said it would close again for two weeks and use the time “to see whether the recent rise in Arizona COVID cases subsides and to re-examine every aspect of its operation.”
The decisions come amid growing outbreaks in much of the South and West. Officials in Arizona, California, Florida and Oklahoma all reported their highest daily case number yet on Thursday. And Texas became the sixth state in the nation to surpass 100,000 cases, according to a New York Times database. Cases there have doubled over the past month.
As in much of the Sun Belt, testing in South Carolina has increased, but that alone does not account for the surge. About 14 percent of people being tested for the virus in South Carolina are positive, up from about 5 percent a month ago.
AMC Entertainment has reversed course on its mask policy, saying that it will now require patrons to wear face coverings when its movie theaters reopen next month.
The reversal comes after Adam Aron, chief executive of AMC, faced intense criticism on social media on Thursday after saying that the company would not require moviegoers to wear masks or be subject to temperature checks at the company’s theaters. Mr. Aron said the company did not want to be “drawn into a political controversy.”
“This announcement prompted an intense and immediate outcry from our customers, and it is clear from this response that we did not go far enough on the usage of masks,” the company said in a statement. “At AMC Theatres, we think it is absolutely crucial that we listen to our guests. Accordingly, and with the full support of our scientific advisors, we are reversing course and are changing our guest mask policy.”
The movie theater chain said that guests who were unwilling to wear a mask would not be admitted or permitted to stay. According to AMC’s website, “in the auditorium, masks may be removed to enjoy food and drinks.”
Alamo Drafthouse Cinema said on Friday that it would require face masks in its theaters “except when eating or drinking,” saying the safety of patrons and workers could not be compromised. “This is not political,” the theater chain said in a tweet.
Regal Entertainment Group also reversed its position on mask wearing on Friday, issuing a statement that all movie theater employees and patrons would be required to wear them. The chain, which had previously said it would require masks to be worn only in cities that required them, said that disposable masks would be made available to customers who needed them.
“Our current mask policy is to mandate for both employees and guests,” said Ken Thewes, chief marketing officer for Regal. “Our ultimate goal is to create a safe environment for our guests and employees. This is a change to our previous policy on masks based on feedback received from our customers.”
The chain said that disposable masks would be made available to customers who need them.
But a rival chain, Cinemark, began reopening some theaters in Texas on Friday without requiring face masks. “It’s a big country out there,” Mark Zoradi, Cinemark’s chief executive, told the entertainment news site Deadline on Wednesday. “There are places that may require it. California may be one. If it’s required in California, we’ll abide by it. There are other places like Texas where it’s not required. In those cases, we’ll highly recommend, but not require it.”
Bowing to political pressure, the Trump administration said on Friday evening that it would disclose borrower information for recipients of millions of small-business loans through the $660 billion Paycheck Protection Program.
The decision is a reversal for the administration, which had closely guarded the information and argued that private businesses should not have their names or the amount of money that they took from the federal government disclosed. The move comes as Democrats had seized on the secrecy surrounding the program to suggest that the bailout was an example of the Trump administration engaging in corporate cronyism.
The new disclosures will apply to loans of more than $150,000. The information will be broken down into five loan ranges, topping out at the maximum amount of $10 million. The Small Business Administration will release business names, addresses, demographic data and jobs supported.
The Treasury Department, which jointly administers the loan program with the S.B.A., did not say when the new information would be made public; however, some of the demographic data will be included in loan forgiveness applications, which might not be submitted for months.
“I am pleased that we have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency, while protecting the payroll and personal income information of small businesses, sole proprietors, and independent contractors,” Treasury Secretary Steven Mnuchin said in a statement.
Federal Reserve officials on Friday warned that the U.S. economic outlook remained wildly uncertain, as parts of the country see a new surge in coronavirus infections.
“So far, in the United States efforts to contain the virus have not been particularly successful,” Eric Rosengren, president of the Federal Reserve Bank of Boston, said in a speech on Friday. With the spread of the disease continuing “and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic.”
The downturn could persist — or worsen — but Randal K. Quarles, the central bank’s vice chair for supervision, said the Fed would determine capital requirements — essentially the financial cushions they must keep to withstand losses — based on economic scenarios developed before the pandemic took hold. The Fed will test the strength of banks against multiple dire economic situations that reflect how the virus might play out, but it will not publish bank-specific results.
“We don’t know about the pace of reopening, how consumers will behave or the prospects for a new round of containment,” Mr. Quarles said. “There’s probably never been more uncertainty about the economic outlook.”
Given the serious risks, the Fed’s annual “stress tests,” the results of which will be released next week, will include three sensitivity analysis scenarios. These would look at how the banking system would fare in the case of a V-shaped recovery, in which output and employment bounce back quickly; a U-shaped rebound, in which jobs and growth take a long time to recover; or a W-shaped trajectory, in which a second wave of the coronavirus forces activity to collapse again, Mr. Quarles said.
All week long, two competing narratives faced off on Wall Street.
Investors were encouraged by signs that the reopening of businesses is having an immediate positive effect on the economy. But they were battered by worry over a growing number of coronavirus infections around the country.
The tug of war between the two views made for a turbulent week, and Friday was no exception. The S&P 500 fell 0.6 percent, after having started the day with a solid gain.
The reversal came after Apple said it would temporarily close some stores in Arizona, Florida, North Carolina and South Carolina after the number of new coronavirus cases increased in those states. The number of new cases is increasing in at least 20 states, an analysis by The New York Times found.
The decision by Apple had an immediate impact on the market, with shares of companies that are likely to benefit from a return to normal — airlines and retailers, for example — immediately giving up their gains.
“The markets started to slide as soon as Apple announced they were closing 11 stores due to Covid spikes,” said Doug Rivelli, president of institutional brokerage firm Abel Noser in New York. “That stoked fears that the economic restart might not be a smooth as people had hoped, and we could be in for a longer period of stagnation.”
Investors also heard a warning from Eric Rosengren, the president of the Federal Reserve Bank of Boston and an influential policy maker within the central bank system, who cited the rising caseloads in South Carolina and Florida as he warned of the economic impact of states reopening before the coronavirus was under control.
Mr. Rosengren said that because of the virus’s continued spread “and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic.”
Updated June 16, 2020
- I’ve heard about a treatment called dexamethasone. Does it work?
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
- What is pandemic paid leave?
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
- Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
- What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
- How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
- How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
- Will protests set off a second viral wave of coronavirus?
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
- My state is reopening. Is it safe to go out?
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
- What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
- How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
- Should I wear a mask?
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
- What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
The push and pull this week has also come amid mixed reports on the economy. A Labor Department report Thursday showed that another 1.5 million workers had filed for state unemployment benefits. The pace of layoffs has slowed in recent weeks but remains elevated. On Tuesday, the Commerce Department said that retail sales rebounded sharply in May, as stores reopened and governments lifted some restrictions.
Still, despite the unease among investors, the market notched a gain for the week with the S&P 500 up nearly 2 percent.
If there is one thing that is almost always guaranteed in an economic downturn, it’s an increase in litigation.
Businesses are going to sue businesses. Tenants are going to sue landlords, who will sue their tenants right back. Insurance companies will contest claims, and start-ups will try to defend their intellectual property from more established companies.
Yet in this recession, one industry that was just getting started during the 2008 downturn has come into its own and is attracting wealthy investors looking for outsize returns.
Meet litigation finance, an esoteric, high-risk investment strategy that lures with the siren song of double-digit returns. It’s an industry with a few publicly traded behemoths, but it remains the preserve of private-equity-style funds that invest in cases, back law firms and act as financial intermediaries when settlements have been reached.
And the pandemic could be its time to emerge from its little-known niche.
“We have the wind to our backs in this unusual environment,” said Howard Shams, the chief executive of Parabellum Capital and an early practitioner in the industry.
Consider Patti Hanks, 62, who recently had ovarian cancer treatment. With her immunity low, she was nervous about returning to her workplace, a store where she would be drawing up financing plans and taking cash payments from customers. The cancer makes her particularly susceptible to severe complications should she contract the virus.
But Ms. Hanks was even more worried about losing her health coverage if she did not go back. Finding a job with health benefits that allowed her to work from home felt like a pipe dream given the economic downturn.
So despite her reservations, she returned to work. She wears a mask and makes sure customers sit a good distance away at an L-shaped desk.
Pre-existing conditions may motivate other workers like Ms. Hanks to return to work especially fast. Those people need coverage to treat the conditions that make them vulnerable in the first place. In the United States, 61 percent of working-age adults get health insurance through work.
“It is one of the many ways the U.S. health care system has made us so much more vulnerable to the effects of the pandemic than other countries,” said Larry Levitt, executive vice president for health policy at the Kaiser Family Foundation. “In other countries, you don’t hear about people losing health insurance when they lose their jobs.”
Cruise lines won’t sail from U.S. ports until Sept. 15, the Cruise Lines International Association said, after its member cruise lines agreed to extend a suspension that expires on July 24. “Although we are confident that future cruises will be healthy and safe, and will fully reflect the latest protective measures, we also feel that it is appropriate to err on the side of caution to help ensure the best interests of our passengers and crewmembers,” the association said in a statement.
The British government said Friday that the national debt, at 1.95 trillion pounds ($2.4 trillion), now exceeded the country’s gross domestic product, the first time this has happened in 57 years. The ratio of debt to G.D.P., which reached 100.9 percent at the end of May, has risen sharply as the government has borrowed heavily to finance programs to support the economy during the pandemic, and as the economy has contracted because of lockdowns to curb the spread of the virus.
Reporting was contributed by Alan Rappeport, Katie Robertson, Mihir Zaveri, Gillian Friedman, Daisuke Wakabayashi, Jeanna Smialek, Keith Bradsher, Chris Buckley, Sarah Kliff, Mohammed Hadi, Niraj Chokshi, Jenny Gross, Mike Ives, Brooks Barnes, Gregory Schmidt and Kevin Granville.
3 Top Stocks to Buy in a Market Crash
The coronavirus market crash in February and March likely tested many investors. Not only did most major market indices fall more than 30% by the second half of March, but the majority of indices haven’t fully recovered yet. In fact, the S&P 500 is still down almost 9% since its peak in February.
With daily new coronavirus cases trending up again in some U.S. states, and given the continued uncertainty surrounding the economy, some investors may be thinking another market crash could be around the corner. If stocks do fall sharply again, investors want to have some investment ideas ready so that they’re able to pounce on any notable buying opportunities. Three stocks that look fairly attractive today but would be exceptionally enticing if they fell by 10% or more are Twitter (NYSE:TWTR), Walt Disney (NYSE:DIS), and Netflix (NASDAQ:NFLX).
Image source: Getty Images.
Social network Twitter certainly didn’t go unscathed from the economic damage of lockdowns and travel restrictions. With a business model dependent on advertising, the company unsurprisingly saw its revenue take a hit in March as many marketers paused or slashed their advertising spend.
But investors should note that the coronavirus pandemic also showed how vital Twitter’s platform is during times of uncertainty. The company saw its daily active user growth surge 24% year over year during Q1 — a record growth rate for the platform.
If the market crashes again, users will almost certainly turn to Twitter to find real-time news stories and discuss current developments. Even more, many of the users that Twitter gains during heavy news cycles will likely stick around as they become accustomed to using the service. This fresh, new user base ultimately represents a long-term monetization opportunity for the microblogging platform.
When the economy finally starts firing on all cylinders, Twitter will likely rake in substantial advertising dollars on a much larger user base.
Media-giant Walt Disney also looks like an attractive market crash buy. While the company is undoubtedly susceptible to the ripple effects of market downturns and economic recessions, the powerful brands under its ownership have some of the best staying power in media.
From its namesake Disney-branded film business to iconic brands like Star Wars, Marvel, Pixar, and X-Men, the company’s assets will provide valuable entertainment to consumers for decades to come. Then, of course, there’s the media conglomerate’s world-renowned theme parks and successful streaming services — Hulu and Disney+.
Image source: The Walt Disney Company.
While shares of Disney have recovered meaningfully from March lows, they’re still notably down more than 20% year to date. If the stock fell another 10% from here, it would likely prove to be a bargain for anyone willing to hold the stock for the long haul.
If you’re searching for a stock that looks cheap during a market crash, you may want to pass on this one. Shares of Netflix — a growth stock in its purest form — are quite pricey. But one thing investors have learned during the recent coronavirus market crash is that streaming-TV giant Netflix’s business is extremely resilient, making its stock’s premium price tag worth paying up for.
Today, Netflix has a price-to-earnings ratio (P/E) of 92. This compares to the P/Es of Twitter and Disney of 39 and 21, respectively. But the company boasts an incredible growth trajectory, making this price tag seem fairly reasonable.
In each of the previous four quarters, revenue grew at least 26% year over year. Even more notable, Netflix’s operating margin is expanding rapidly, demonstrating the scalability of the company’s business model. For instance, in the first quarter of 2020, the streaming giant’s operating margin was 16.6%, up from 10.2% in the year-ago period.
If the market crashes again and investors get an opportunity to buy Netflix at a 10%-plus discount from today’s price, they might want to consider taking action.
Author: Daniel Sparks
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Опубликовано: 20 июн. 2020 г.
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- I’ve heard about a treatment called dexamethasone. Does it work?