WA companies knocked by global uncertaintyDOWNLOAD
Friday, 14 October 2011: In September, wave after wave of troubling announcements, poor economic data and falling commodity prices have caused investors to flee Australian markets. The Deloitte WA Index dropped 11.9% to close at AU$148.6bn at 30 September 2011.
Deloitte WA Managing Partner Keith Jones said the State’s major resource companies were sold down with Fortescue Metals Group, Iluka Resources Limited and Woodside Petroleum Limited losing 26.9%, 23.6% and 7.7% respectively, together wiping AU$8.8bn off the markets.
“We are now experiencing the effect of prolonged uncertainty and fear within the markets. Investors are preferring cash,” he said.
Almost all commodity prices surveyed fell during the month. Base metals were the most heavily affected, on the back of growing concerns of a double-dip recession. A number of key base metals surveyed experienced double digit losses during September, with Copper, Lead and Nickel falling 23.9%, 22.2% and 20.3% respectively.
Precious metals also fell with Gold prices down 10.9% Silver down 28.1%, Palladium down 22.4% and Platinum down 17.6%. Bulk commodities Iron Ore and Coal were relatively stable with Iron Ore down 5% and Coal up 2% in the month.
The All Ordinaries was affected by heavy losses in resource and oil & gas companies, closing the month of September down 6.9%. The US S&P 500 and Nikkei were down 4.3% and 2.9% respectively, whilst the FTSE 100, after a turbulent month, finished at its lowest level in two years down 1.4%.
Despite deteriorating commodity prices, resource exploration underpinned the ‘Movers and Shakers’ in September. Hunnu Coal Limited, Allied Gold Mining Plc, and Elemental Minerals Limited posted increases in market capitalisation of 31.3%, 13.9% and 7.2% respectively during the month.
In mid September, Hunnu Coal Limited announced a Bid Implementation Deed with Thailand’s leading energy provider, Banpu Minerals Ltd, to purchase all Hunnu shares that the company does not already own for AU$1.80 per share. This price represented a significant premium to trading levels at that date and saw Hunnu’s share price leap 25% in one day, from AU$1.38 to AU$1.73. The company closed the month of September with a market capitalisation of AU$368m, up AU$88m from the previous month.
Allied Gold Mining Plc’s share price rose 13.9% during the month of September, contributing to the company’s growth in market capitalisation of AU$29m to close at AU$237m. Continued favourable exploration results have seen the company close out the month in the 82nd position on the Deloitte WA Index.
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