Viewpoint: Bullish
Secondly we like our old favourite the copper miners COPX ETF which has already corrected 29%, we are keen accumulators into further weakness, similar to OZ Minerals (OZL)
MM has started weighting this portfolio towards China and away from the US in line with recent commentary, there are a number of positions that are on close watch at the moment:
A solid week for this portfolio considering the choppy nature of markets at present, over 70% of our stocks rallied with none rising, or falling by more than 5%. Overall, the portfolio increased by 0.53% while our cash position sits at 14%.
There has been growing interest in the rare earths market this week as electric car makers look for ways to reduce their reliance on a product that is primarily produced in China (about 85% of global production). The news has been a negative for the market overall and that has resulted in Lynas falling ~12%.
This isn’t always the easiest stock to value with so many moving parts but it’s in the sector we like and the technical risk / reward picture is excellent, another ~4% lower and S32 will enter our “buy zone” – yet another stock / market we like 4% lower.
Similar to oil the very important industrial metal copper has corrected from its mid-May high, exactly the same time that investors started rotating away from resources towards tech. Our ideal target for copper is a test of the psychological $US4.00/lb area although we have to remain mindful that its rarely an “ideal world” and we may have to consider paying up for the likes of OZ Minerals (OZL) in the weeks ahead.
Crude oil has accelerated to the downside over recent weeks on concerns around the coronavirus reigning in economic expansion and OPEC’s agreement to boost output – not a winning combination for the commodity short-term.
The ASX200 again managed to hold onto its 7200 support in admirable fashion yesterday even in the face of a 725-point plunge by the Dow, the markets “buy the dips” attitude is undoubtedly working for now. However while MM is part of this core view that the bull market is alive and well our preferred scenario is we get a short sharp washout down ~4% to catch out the complacent traders / buyers because as we know in markets all good things do eventually come to an end i.e. MM like many fund managers is looking to buy weakness but we believe it might be a touch lower than many are assuming hence our gradual accumulation as opposed to “all in” style buying.
Teck Resources Limited is a Canadian resource company. The Company operates a portfolio of copper and zinc operations across North and South America. The Company’s operations and projects include Antamina, Cardinal River, Galore Creek Project, Carmen de Andacollo, Highland Valley Copper, Trail Operations, Quebrada Blanca, Carmen de Andacollo, HVC Mine Life Extension Project, Galore Creek Project, NorthMet Project, Mesaba Project, NuevaUnion Project, Red Dog, Sullivan Mine and Trail Operations. The Antamina mine is a copper and zinc mine, located in the Andes Mountain range, 270 kilometers north of Lima, Peru. The deposit is located at an average elevation of 4,200 meters. Its Carmen de Andacollo is located in the Coquimbo Region of central Chile at an elevation of 1,000 meters, approximately 350 kilometers north of Santiago. Its Galore Creek is located within the territory of the Tahltan in northwestern British Columbia, approximately 150 kilometers northwest of Stewart.
OSH +6.27%, STO -4.98%: This morning Santos (STO) confirmed that on 25 June it submitted a merger proposal to OSH where Oil Search shareholders would receive 0.589 new Santos shares for each OSH share held. This represented a 12.3% premium to the Oil Search closing price on 24 June of $3.78 and if they went for it, Oil Search shareholders would own 37% of the merged group and Santos shareholders would own 63%.
