JOHANNESBURG (miningweekly.com) – The market capitalisation of Western Australia- (WA-) listed companies closed the month of September at A$118.5-billion, indicating a 6.4% month-on-month drop and pointing to continued pressure on the industry from falling commodity prices and continued global equity market jitters, the Deloitte WA Index revealed on Friday.
The index had now dropped a “staggering” 20.6%, or A$30.8-billion, since June 30, 2014.
Deloitte WA clients and markets partner Tim Richards said September saw anxious investors initiating sell-offs in equity markets amid growing concerns of a slowing Chinese economy and an expected interest rate hike by the US Federal Reserve.
“This continues a lengthy tough run for the Deloitte WA Index, which, despite an 8.4% boost from the listing of South32, in May, has dropped a total of A$30.8-billion since mid-2014,” he commented.
Of the key commodities surveyed, palladium and platinum were the biggest movers, with palladium increasing by 15.4% to $661/oz and platinum decreasing by 9.2% to $917/oz.
“An emissions scandal with Volkswagen diesel cars is expected to see reduced demand for diesel-powered cars, leading to weakened platinum demand, while palladium has serendipitously picked up through its use in petrol-powered cars,” explained Richards.
Zinc fell by 7.5% in September to $1 671/t – a five-year low – driven by weak demand from China and news that Glencore was actively looking to sell off some of its zinc commodity inventories to reduce debt.
Tin experienced a significant increase of 9% to finish at $15 710/t, after the Indonesian government gave its support to a ban on tin exports from the country, effective October 1.
Returning to market capitalisation, among the major index players that saw moves in September was Woodside Petroleum, whose market capitalisation fell A$2.7-billion following news that gas producer Oil Search had rejected its A$11.6-billion all-share takeover offer.
Liquefied Natural Gas shares closed at A$1.28 – a 54.3% decrease – owing to the flailing oil price, which subsequently led to the company dropping out of the top 10 WA Index companies, finishing the month in sixteenth position.
Amid the turmoil, Northern Star Resources bucked the trend, increasing its market capitalisation by 32.2% through positive news that a new technology to significantly reduce electricity costs could be used at its Jundee project, which helped it climb to seventh position, up from twelfth place, in September.
Independence Group, meanwhile, rose seven spots to finish at nine, after Sirius Resources backed the company’s takeover early in the month.