The S&P 500 is near a key level of support that if broken could see the recent rally unwind very quickly. The S&P 500 has been a source of optimism for equity investors amid calls for a US recession and slow growth in China and Europe.
A breakdown in the S&P 500 could spark a global equity sell-off that impacts markets from the UK to China.
Having surged higher driven predominantly by 8 technology giants including Apple, Amazon, NVIDIA and Meta, the S&P rally has lost steam and is starting to look vulnerable.
A disconnect between these 8 tech stocks and the rest of the S&...
Greatland Gold plc (LON:GGP), a leading precious and base metals focused mining development and exploration company, has today announced an update on the Havieron gold-copper project, its flagship asset, in the Paterson Province of Western Australia.
The world-class Havieron gold-copper project was discovered by the £377m capitalised Greatland and is presently under development in joint venture with Newcrest Mining, the ASX gold major which is being taken over by the Newmont Corporation.
The box cut and decline to the Havieron orebody, which commenced in February 2021, has seen significant progress continuing on the exploration decline with total development at over 2,600 metres in early August 2023.
Havieron is located approximately 45km east of Newcrest’s existing Telfer gold mine, with the group stating that subject to a positive Feasibility Study and Decision to Mine, it may leverage the existing Telfer infrastructure and processing plant.
Development update
The main decline continues to progress, having surpassed 1,840 metres.
Decline support excavations for ventilation, services and materials handling takes the total development to over 2,600 metres.
The decline has continued to progress through improved ground conditions since successfully developing through the middle aquifer late last month.
Managing Director Shaun Day stated that:
“The underground development at Havieron is making good progress as we continue to advance to the top of the orebody.
We are working towards the publication of an updated MRE, which will incorporate data from a further 80,000 metres of growth drilling at Havieron since our March 2022 MRE update.
We are targeting completion and announcement of an updated MRE during the December 2023 quarter and look forward to updating the market in due course.”
The group’s shares are largely unchanged at 7.30p, but against some healthy early dealing volumes.
The FTSE 100 joined a global equity rally on Thursday after US CPI rose 3.2% in July, lower than the 3.3% consensus estimate but higher than last month’s 3% read.
Today’s release confirmed US CPI is well past its worst levels and is settling at a level that removes the need for sharp interest rate hikes. Investors cheered the release, with the S&P 500 trading over 1% higher and the FTSE 100 gaining 0.3%.
“After today’s data, the probability of a Fed rate rise has decreased, and this is already being reflected in the markets – stock futures are up while two-year treasury yields and the dollar are both down,” said Richard Flax, Chief Investment Officer at Moneyfarm.
“After two consecutive lower-than-expected CPI prints, some investors are perhaps overoptimistic in looking for a rate cut in Q1 2024. We’re likely to hear a lot about the Fed being data-dependent, as the Fed remains wary of declaring victory too soon.”
With markets currently pricing interest rate cuts in early 2024, the Federal Reserve will remain firmly in focus as a shift in expectations of the first-rate cut could rock equity markets to the same extent initial rate hikes did 18 months ago. In addition, any further pick-up in inflation will be bearish for stocks.
The Federal Reserve will next meet in September to decide on rates, and investors will be closely watching for any hints of the trajectory of rates going into next year.
“Overall, inflation is grinding back towards target and the labour market is slowly cooling, but the FOMC will want to see yet more data before deciding in September if progress has been fast enough to warrant a pause, or if the balance of risks calls for another hike to ensure inflation targets are met. Market pricing currently favours a pause, but the market has underpriced the Fed’s actions before,” said Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management.
FTSE 100 movers
After receiving two broker price target increases, InterContinental Hotels was the FTSE 100’s top gainer – Jefferies now has a 6,400p price target. InterContinental Hotels shares were 7% higher at 6,049p at the time of writing.
The FTSE 100’s losers were dominated by companies trading ex-dividend, including Rio Tinto and Fresnillo.
Spirax‐Sarco Engineering shares were off by 4% after reporting a 7% decline in operating profit in the first half. abrdn was down over 11% as selling resumed after issuing a trading update earlier this week.
Denmark-listed green energy company Orsted has enjoyed surging cash flows from operations in the first half of 2023 despite suffering from lower wind speed and gas prices during the period.
Orsted is a leading green energy company with offshore, onshore wind, and bioenergy operations. Orsted operates Hornsea 2, the world’s largest offshore windfarm located off the coast of Grimsby.
The group generated DKK 45.9 billion in revenue in the first half of 2023, a reduction of 24% compared to last year, primarily due to lower gas prices, although lower average wind speeds also dented income.
Offshore wind EBITDA stormed higher to DKK 8.4 billion in the first of the year, up from DKK 7.8 billion in the year prior. Bioenergy EBITDA was entirely wiped out and total group EBITDA fell to DKK 10.230 billion from DKK 13.044 billion. Cash from operations jumped 442% to DKK 12.5 billion.
During the period, Orsted recorded a number of milestones which will set them up for future growth.
These include receiving development approval for Hornsea 4, with a capacity of up to 2.6 GW. In addition, Orsted confirmed progress in establishing offshore operations in Ireland and the US.
Although Orsted operates in the innovative green energy space, they face the same inflationary pressures as other energy producers. Despite this, analysts at Killik & Co believe many of the constraints are priced into shares with the price-to-earnings multiple near five-year lows.
“The offshore wind industry has been in a difficult spot in recent years, with costs increasing while developers are locked into pricing that was calculated in a lower cost environment. However, the long-term picture is more positive, with strong, multi-decade growth expected in order to decarbonise electricity generation,” said Mark Nelson, Senior Equity Analyst, Killik & Co.
“We see Orsted as the world’s premier developer of offshore wind, and therefore best placed to benefit from its potential growth, though we note that short-term uncertainties remain. Orsted shares trade on 23.5x December 2024 earnings, close to the lowest they have traded in the last five years and well below the average multiple, which we believe discounts much of the near-term concerns.”
Digital marketing company Silver Bullet Data Services (LON: SBDS) has disappointed since it joined AIM, but the latest interim trading statement shows a 76% increase in revenues to £4.1m. That growth and reduced costs have helped to reduce the interim loss. The company is benefiting form the move to customer privacy-based marketing services. The share price recovered 31.6% to 37.5p, compared with a June 2021 placing price of 257p.
Galileo Resources (LON:GLR) says initial analysis has confirmed the presence of lithium mineralisation over a significant width in the first hole at the Kamativi project in Zimbabwe. Peak values include 4 metres@1% Li2O and other pegmatites have been identified with similar characteristics. Sales of the 4D contextual AI marketing service are building up. The share price jumped 16.7% to 1.225p.
Eco Atlantic Oil and Gas (LON: ECO) is acquiring a 60% operated interest in the Orinduik block, offshore Guyana from Tullow Oil. This adds to the exiting 15% stake. The initial payment is $700,000 with a $4m payment on a discovery and $10m on receipt of a production licence. There are also royalty payments of 1.75% on the 60% interest. The deal is subject to regulatory approval. The share price increased 12.3% to 16p.
SmartSpace Software (LON: SMRT) chief executive Frank Beechinor acquired 120,587 shares at 41.3p each, which more than doubles his shareholding. Two other directors also acquired shares. At around 40p each. The share price moved up by 9.52% to 46p.
FALLERS
Execution only broker Jarvis Investment Management (LON: JIM) is the worst performer on AIM falling 17% to 122.5p. Trading is below expectations and client numbers have reduced due to restrictions on Model B clients. A regulatory enquiry is requiring additional compliance processes. The quarterly interim dividend is 2.25p/share. Net cash was £5.2m at the end of July 2023. WH Ireland has reduced its 2023 pre-tax profit forecast from £7m to £6.6m, although that excludes the additional costs of the enquiry of around £500,00.
Silvercorp Metals Inc has sold 28.7 million shares in Celsius Resources (LON: CLA) at A$0.015223/share, reducing its stake to 12.15%. The share price declined 9.09% to 0.75p.
Allergy Therapeutics (LON: AGY) expects a 16% reduction in revenues for the year to June 2023. This was due to the pause in production during the year. The underlying loss before R&D and exceptionals is £13.3m, while it is £33.4m including R&D costs. There is £14.8m in cash after drawing down £26m of the loan facility. Sales are expected to be slightly lower this year as capacity is used for product for clinical trials. The share price fell 8.82% to 310p.
Cell-engineering company MaxCyte (LON: MXCT) reports a 6% decline in revenues to $9.04m and a 27% increase in loss of $10.5m. Delays in research projects hit the company. The share price slipped 8.82% to 310p.
Ex-dividends
Cenkos Securities (LON: CNKS) is paying a dividend of 3p a share and the share price fell 3.5p to 33.5p.
Greencoat Renewables (LON: GRP) is paying a dividend of 1.6 cents a share and the share price dipped 2.5 cents to 101.5 cents.
Quartix Holdings (LON: QTX) is paying an interim dividend of 1.5p a share and the share price is unchanged at 220p.
Rotala (LON: ROL) is paying an interim dividend of 0.5p a share and the share price slipped 0.5p to 44p.
Sahiba Patni is the Co-Founder of WeDeliver, an app powering “Direct-to-Consumer” commerce, connecting SMEs and Users via an On-Demand Marketplace Platform. The platform helps users save their time by running their errands and delivering a wide assortment of products – from groceries to beauty products – directly to their doorstep. It also provides tech and logistical support to its vendor partners, enabling them to reach a wider audience base.
WeDeliver is now in the middle of a crowdfunding campaign on Seedrs; here are some insights from Sahiba on the inspiration behind WeDeliver, how it works, and how it is creating an ecosystem that empowers both users and local businesses across London.
What was the inspiration behind founding WeDeliver?
A little over a year ago, I saw a new mother on the tube. She was holding a baby, a dog, a bag of groceries, and a parcel. And she wasn’t the only one juggling too many things. So many of us are living busy lives, and there is never enough time in the day to get work and errands done – let alone get some “me time.” It made me wonder how we can create a system that can make life less overwhelming.
In parallel, in my years living in the UK, I’ve seen a number of home-run businesses and SMEs struggling to scale without the presence of a large marketing, tech, and delivery infrastructure. As a result, they are unable to reach customers outside their limited delivery range, or establish a presence in new areas.
There is a gap in the market; users are struggling to run all their errands on time, while vendors are struggling to reach customers where they are. WeDeliver was born as an attempt to bridge both those gaps.
WeDeliver is an on-demand marketplace platform connecting users and SMEs. From a local bookshop aiming to foster a community of avid readers to a specialised family-run Asian chilli oil provider seeking to go beyond their neighbourhood by providing home delivery, WeDeliver aims to bring them online. Users have the convenience of saving time and having items delivered home, while local businesses get to expand their reach.
Can you explain some of the services you offer?
WeDeliver powers “Direct-to-Consumer” commerce, connecting SMEs and Online Users via the WeDeliver app. This provides an advantage to both users as well as our vendor partners:
WeDeliver’s marketplace model gives users access to the widest assortment of products through a universal catalogue, which combines all the inventory of our merchant partners. They can order a variety of items – from rice to beauty products – all in a single order and have them delivered within a same-day three hour window. Additionally, WeDeliver uses a pricing algorithm; if multiple partner vendors offer the same product, only the lowest priced product is shown to the customer.
By bringing SMEs onto our platform as vendor partners, we provide them with the logistics infrastructure. As a result, they are empowered to expand beyond their usual delivery radius and reach more users. In addition, WeDeliver also provides technological insights and marketing capabilities to expand their customer base. We have a section for advertising (banner placement on the app), in addition to emails.
How does WeDeliver empower SMEs?
WeDeliver runs on a marketplace model. This gives us two advantages
It allows us to be capital-light since all inventory belongs to our merchant partners.
It lets us onboard a wide variety of merchant partners, giving local SMEs a larger footprint. Many vendors don’t have their own tech and delivery infrastructure because they’re too small. As a result, it gets harder to scale in a tech-first ecosystem. This is where WeDeliver comes in. We offer delivery support that enables them to reach a wider audience, as well as data that helps them optimise their product selection.
I would like to elaborate on this with an example of one of our merchant partners – an independent, family-run business that specialises in preparing healthy lunches for fitness-conscious eaters. Partner 1 prepares lunch boxes for the office-going crowd, and Partner 2 drops off the boxes.
As a two-person team, they are restricted by how far Partner 2 can travel. He has to drop off lunch boxes before he gets to his day job in the morning.
WeDeliver’s fleet helped them by:
Arriving at the office close to lunch time
Delivering lunch boxes across the city, which provided an added advantage of a fresh lunch for the users.
We work hand-in-hand with independent businesses in London, and don’t compete with them.
You’ve explained that you want to bring some of the tech prowess of India to the markets in the UK, how are you planning to set up that ecosystem?
As an Indian citizen who immigrated to the UK, I’m proud to see that India has moved from back-end tech support to fronting initiatives and creating inclusive systems that everyone can adopt. Digital payments initiatives, food delivery startups, and home improvement apps have been widely used by users across demographics, and this has inspired me to bring a similar, community-based ecosystem to the UK.
So far, we have integrated an integrated AI-driven pricing system into the WeDeliver app. That means, if a user searches for a product that’s available in multiple different stores in the same area, the algorithm automatically selects the lowest-cost option.
We’ve made this possible with the help of a core team that has previously been involved in building billion-dollar companies around the world. We are lucky to work with tech experts, brand-building wizards, and more.
You are beginning a crowdfunding campaign on Seedrs, can you explain what you’re using the funds from the platform for?
We recently went live on Seedrs, and are very excited to see where this campaign can take us. Here are some of our plans for the funds we receive:
AI integration: We’re working on making our team more tech-driven, bringing Machine Learning technology into the platform to enhance user experience. For instance, if a user asks for a “paneer butter masala” recipe, they will be able to add all the ingredients to the cart immediately. Or if they ask for a suitable moisturiser for dry skin, WeDeliver will bring up a list of the most suitable products that they can order.
$WeDeliver token: This is a user-focused programme that aims to provide non-order related benefits to build an ecosystem around WeDeliver. This token will form the basis of our loyalty programme using blockchain technology.
Community building: The additional funds will be used to host community events in collaboration with our vendor partners. We also plan to launch a referral program, which enables customers to act as WeDeliver’s brand advocates.
Pruksa Iamthongthong and Adrian Lim, Investment Managers, Asia Dragon Trust plc
China’s recovery has been lacklustre, to the disappointment of investors
Nevertheless, China’s economy is still building, albeit at a slower pace
The region has a range of idiosyncratic growth opportunities
The end of China’s zero Covid policy brought renewed confidence to Asian markets, as the country’s recovery promised to restore economic momentum to the region as a whole. However, China’s revival has proved lacklustre, and investors have retreated from Asian markets. What could bring a more permanent revival in confidence back to the region?
China may not have roared out of lockdown in the same way as many Western economies, but our view is that its lacklustre recovery should not be judged too harshly. Given the length and severity of the lockdowns, it was always likely to take time for Chinese businesses and consumers to adjust to a new reality. The consumer is still waiting in the wings to support the country’s economy. Excess savings ticked up significantly during the pandemic and, unlike in the US, remain largely unspent.
Traffic is building, as Chinese citizens start to move around the country once more. It has already recovered to above its pre-Covid level, but spending will take a few more months to normalise. With tourism and leisure activities reviving, it is too soon to write off the Chinese recovery just yet.
Equally, other problems are starting to resolve across China. Youth unemployment has been ticking high, an unintended consequence of crack-down on technology, communications and smaller businesses seen in 2020. However, this is now stabilising, with companies such as Alibaba and Tencent reporting stronger earnings and announcing plans to hire more staff1. The worst appears to be over.
It is an imperfect recovery. For example, the property and infrastructure sectors are unlikely to drive growth as they have done historically. Infrastructure spending is likely to be stable, with a greater focus on ‘new’ infrastructure such as data centres and renewable energy, rather than roads and railways. The government continues to act in stabilising the property sector, as it tries to bring down leverage and encourage households to redeploy capital into more productive parts of the economy.
Nevertheless, amid the country’s revival, we find plenty of interesting companies that may benefit from reopening in the short-term, but also from structural growth trends in the longer-term. AutoHome, for example, should benefit from renewed demand for cars. We hold a number of tourism companies that are beneficiaries of growing demand for domestic and international tourism. Insurance group AIA group is seeing growing demand for its life insurance products as face-to-face interaction resumes again.
In general, it pays to invest alongside the Chinese Communist Party rather than against it. In the Asia Dragon Trust portfolio, this is most evident in our ‘going green’ theme. The Chinese government has accelerated its investment in the energy transition, which is boosting growth for companies across the ‘green’ ecosystem. We see similar government-led trends in areas such as healthcare and digitalisation.
Beyond China
However, even without the influence of China, there are idiosyncratic growth stories across Asia that are often overlooked by investors. We would highlight Vietnam. It had a choppy year in 2022 but remains among the strongest beneficiaries of the move by international companies to diversify their supply chains. It has compelling demographics, a stable government and its growth rate continues to soar.
TSMC is a top holding in the Trust. The company appears to be in a strong position to capitalise on the excitement over generative Artificial Intelligence (AI). It has a near-monopoly on certain parts of the semiconductor market. It remains undervalued, given its importance in global supply chains.
As consumption and business growth starts to revive, it will benefit not just China, but all intra-Asian trade. Areas such as Thailand will be beneficiaries of rising tourism, for example, with Chinese tourists accounting for around a quarter of its overall tourist arrivals pre-Covid. We see a stronger period of growth ahead.
Asian economic growth
There are compelling reasons to believe Asian economies will be in a better position than many of their Western peers from here. Western economies have taken on significant debt, but Asian governments have been far more restrained. It is a similar picture for corporates: Asian corporate balance sheets are in much better shape than their US peers.
A less welcome side effect of this restraint is that capital spending has been low. For much of the last decade, global capex has been below trend, which has contributed to some underperformance. We are starting to see that picking up, particularly as the ‘China plus One’ strategy – where international companies seek to diversify their supply chains beyond China – gets into full swing.
This is all encouraging, but there is one factor that remains elusive: confidence. Valuations remain low, particularly relative to the US, but also to their own history. When people think of Asia, they think of China and that has dented sentiment. For international investors, there remain questions over whether China is truly investable.
As we see it, many people are aware of the opportunity in Asia, but no-one wants to be the first mover. We do not have a crystal ball on the factors that will shift sentiment. However, we believe the region has a lot going for it at a time when growth is elusive elsewhere. Patience should be rewarded.
Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.
Important information
Risk factors you should consider prior to investing:
The value of investments, and the income from them, can go down as well as up and investors may get back less than the amount invested.
Past performance is not a guide to future results.
Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
Movements in exchange rates will impact on both the level of income received and the capital value of your investment.
There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
Yields are estimated figures and may fluctuate, there are no guarantees that future dividends will match or exceed historic dividends and certain investors may be subject to further tax on dividends.
Other important information:
Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.
Persimmon shares were higher on Thursday after the housebuilder maintained guidance for completions and operating profit, saying they see cost inflation moderating in the coming months.
After a dismal first-half trading, the optimism in Persimmon’s outlook was cheered by traders and the stock was over 3% higher in early trade on Thursday.
Persimmon’s H1 2023 completions sank to 4,249 from 6,652 in the same period last year. Total housing revenue fell to £1.19bn from £1.69bn.
The sharp reduction in their key metrics reflects a challenging environment for housebuilders as mortgage costs rise and consumers are squeezed by inflation.
However, as we explained yesterday when reporting Bellway’s results, the bad news around the UK economy and poor housing market is largely priced into housebuilding shares and any signs of good news are met with buying. This was evident in both Bellway yesterday and Persimmon today.
Whether this can persist will depend on completion rates in the second half.
“Housebuilder Persimmon is sticking with its full year expectations and that suggests it is doing a decent job of managing said expectations,” said AJ Bell investment director Russ Mould.
“The first half was truly bleak and understandably so given the removal of the crutch provided by the Help to Buy scheme and as potential purchasers face up to much more expensive borrowing costs.
“Given the inflationary pressure on build costs has been in place for some time and shows no sign of disappearing any time soon, a drop in volumes and average selling prices was always likely to leave Persimmon exposed.
“Persimmon’s strategy of retrenchment and adopting a wait and see approach seems a prudent one. The company had already rebased its dividend and keeping a financial buffer to see it through the current turmoil seems sensible. The company is also looking at belt-tightening, putting pressure on contractors and adopting more efficient build processes.”
Alien Metals shares were sharply lower on Thursday after the exploration company said it had conducted a heavily discounted placing to fund salaries and further exploration activities.
Alien Metals raised £2m through the placing of 1,000,000,000 new shares to a restricted selection of investors at a price of 0.2p per share.
Broker WH Ireland was issued with 39,930,144 shares in lieu of fees.
The placing price represents a 29% discount to the closing price 8th August. Alien Metals shares were down 33% to 0.18p at the time of writing on Thursday and are down 65% in 2023 so far.
The company said they were continuing to negotiate offtake agreements for the Hancock iron ore project with interest parties including Anglo American. Work continues at a number of their other projects.
Premier African Minerals shares were slightly higher on Thursday after confirmation the Premier African CEO was increasing his loan to the company to £2m.
Premier African Minerals shares were 2% higher at the time of writing on Thursday.
The move by CEO George Roach can be interpreted either as a CEO having confidence in the business, or the company being in a tricky financial situation with few options for financing requiring the CEO to step in.
Nonetheless, Premier African Minerals shareholders are facing a tense couple of days ahead of a general meeting (GM) to be held 12th August.
The GM is setting about disapplying preemption rights in order to enhance Premier African Minerals’ ability to raise capital. The company said if the resolution is not passed, they may be forced into a heavily discounted open offer.
Whether the resolution passes or not, the fact the GM is being pushed forward by the company suggests there is a considerable need for capital which will likely be satisfied through the issue of new shares.
Premier African Minerals are currently locked into negotiations with lithium offtake Canmax after Canmax issued a termination notice due to a failure to meet production targets. Canmax has a 13% stake in Premier African Minerals.
