Energy / Resources
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Key issues for 2015
Roger Montgomery
January 5, 2015
In December I wrote an article for the ASX Investor Update, I thought I would share my thoughts with you as a welcome back to the year ahead.
What you should be watching out for in 2015 and what to expect with property prices, index funds and shares. continue…
by Roger Montgomery Posted in Companies, Consumer discretionary, Energy / Resources, Financial Services, Insightful Insights, Investing Education.
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Are you throwing the baby out with the bathwater?
Roger Montgomery
December 22, 2014
As we start to turn our minds to a well-earned break, we cannot help to ponder what the year ahead might unearth and whether we’ll find something useful and attractive that others have thrown out.
What we know today however, is that Materials and Energy stocks are under the pump from rising supply and falling demand. Some of them, along with those in the mining services game, will shutter operations or go broke – don’t forget there are over 700 mining services companies in Australia and 90 per cent of them are unlisted. Given that China is forecast by the US Conference Board to be growing at only 5.5 per cent in the next few years and by 3.5 per cent in the years to 2025, it is difficult to see any rapid turn around in the economics of materials exploration, mining and production. continue…
by Roger Montgomery Posted in Consumer discretionary, Energy / Resources, Financial Services.
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Virtuous and Viscious Cycles
Ben MacNevin
December 19, 2014
For the past decade, the energy sector and Emerging Markets have been fuelled by a growing China. Now, as China slows and the oil price plummets, the feedback loop has turned decisively viscious. But after having it so good for so long, have today’s market participants fully understood the downside risk? continue…
by Ben MacNevin Posted in Energy / Resources.
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Joe’s mid year economic and fiscal outlook
David Buckland
December 16, 2014
Australia is now facing a commodity bust and the outlook is for lower growth and pressure on public finances with the budget deficit for Fiscal 2015 blowing out to $40 billion. Meanwhile, the Australian Dollar has declined from US$1.05 to $0.82 in the past twenty months and a low of US$0.75 is on the cards. continue…
by David Buckland Posted in Economics, Energy / Resources, Insightful Insights.
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Eco growth, is it slowing?
Russell Muldoon
December 10, 2014
In the past few months, we have noted that retailing – among other sectors that make up the Australian economy – slowed dramatically in the June quarter of 2014. The September quarter reports from many companies over AGM season saw a continuation of that trend.
Further to our recent observations, Australia GDP just printed at 0.3 per cent for the September quarter. By contrast, 0.5 per cent for the June quarter 2014, confirms that economic growth is waning in Australia and the RBA might be forced to cut rates further. continue…
by Russell Muldoon Posted in Economics, Energy / Resources, Insightful Insights, Investing Education.
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A good year for active fund managers?
Tim Kelley
December 3, 2014
The ASX has gone nowhere this year. After strong performances in 2012 and 2013, 2014 is looking decidedly lacklustre going into the home straight.
One of the features of the year to date has been the very poor showing by resources companies. The Australian equity market has a heavy weighting to resources, and when commodity prices decline, the Australian equity market can lag those of other nations. Clearly this can be a positive as well – in boom times a strong resources market will drive the ASX higher. continue…
by Tim Kelley Posted in Energy / Resources, Insightful Insights, Investing Education.
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Oils ain’t oils…
Roger Montgomery
December 2, 2014
Despite our best efforts to alert investors and advisers to the traps, many remain unwitting speculators.
Take the recent collapse in the price of oil. An army of analysts has already produced a mountain of research and thought-pieces under titles like “Winners & Losers from the Oil Price Crash”. continue…
by Roger Montgomery Posted in Airlines, Energy / Resources.
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How powerful is ISLM analysis?
Roger Montgomery
November 28, 2014
Be sure to watch this video from March 2013 (almost two years ago) and then read on…
It only takes three or four minutes to learn about the forces of supply and demand and their effect on prices. It usually takes an entire semester to explain the forces of supply and demand to a first year university student so consider the few minutes you spend here a value-investing opportunity.
This week our friends at the ABC reported a painful situation in one of Australia’s important industries: “Activity in the resources sector continues to tumble, with a new government report showing investment commitments to major projects are now at the lowest level in more than a decade.” continue…
by Roger Montgomery Posted in Energy / Resources, Insightful Insights, Investing Education, Value.able.
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Where is the demand for heavy equipment?
David Buckland
November 24, 2014
At last week’s Annual General Meeting, Seven Group Holdings Limited (ASX: SVW), the Kerry Stokes-controlled diversified operating and investment company, revealed there was more pain to come from their WesTrac Australia business.
WesTrac operates as the sole Caterpillar dealership in WA, NSW and the ACT. It supplies and services new and used Caterpillar machinery for the mining, construction and forestry markets. continue…
by David Buckland Posted in Energy / Resources, Insightful Insights.
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Iron Ore Pricing: Where is the floor?
David Buckland
November 14, 2014
Citigroup Inc. analyst, Ivan Szpakowski has slashed his iron-ore forecast to average US$65/tonne in 2015.
Ivan is looking at the iron-ore price bottoming in the September 2015 quarter at an average US$60/tonne on the back of renewed supply growth and further demand weakness. About 140 million tonnes of export supply growth is expected in 2015, with the bulk of this coming from Rio, Vale and BHP.
When the Australian Federal Budget deficit of A$30 billion for the 2014/2015 financial year was announced in May, the iron-ore price was above US$100/tonne and few analysts could see it would decline to the current levels.
So far this calendar year, the iron-ore price has declined 44 per cent from US$131/tonne to US$74/tonne. If Ivan is right, there are further declines expected.
As we have previously noted, it is worth remembering that for decades prior to 2004, the price of iron ore traded between just US$10/tonne and US$20/tonne. The price then rallied to $187 in 2011. It has been falling ever since. Today’s experts guessing iron ore’s near term levels are the same people who failed to see the current levels materialising.
by David Buckland Posted in Energy / Resources, Insightful Insights.
