PERTH (miningweekly.com) – The market capitalisation of Western Australian listed companies fell by 1.1% during February to close at A$118-billion.
Advisory firm Deloitte’s clients & markets partner for Western Australia, Tim Richards, said that the month yielded strong commodity results with gold, iron-ore and crude oil prices all moving in the right direction.
“Interestingly, pure play gold companies continue to shine among the Western Australian Index as the gold safe haven strategy plays its part within investor portfolios. Since June 2015, we have observed the aggregate market capitalisation of these companies increase by 67.9%, with February alone providing gains of 29.2%,” he said.
Gold increased 10.4% during the month as investors turned to the safe haven asset given volatility in equity markets, and as holdings in exchange-traded funds rose to the highest level since October 2014.
Iron-ore, which had the biggest increase for the month, rose 15.4% to finish the month at $49.4/t, with Richards pointing out that prices advanced closer to $50/t as Chinese mills restocked after February's Lunar New Year break.
Crude oil rose by 5.2% to close at $36.3/bl, following news that Saudi Arabia and Russia had agreed to freeze oil output at January 2016 levels. Richards said that the move by the world’s two largest producers is a big step forward being the first significant cooperation between Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers in 15 years.
Meanwhile, February also marked the end of the half-yearly reporting season, with Deloitte counting diversified spin-off South32 as one of the winners, following the announcement of its half-year results, with investors shifting focus to resources companies as commodities gained ground during the month.
ASX-listed Mineral Resources’ market capitalisation rose by A$383-million, or 55.3%, during the month following the release of strong half-year results and the announcement of an increased dividend, while Saracen Mineral Holdings’ market capitalisation increased by A$202-million, or 35.4%, as a result of the rising gold price and increased production following the first gold pour at its Thunderbox project in mid-February.
Gold miner Northern Star Resources’ market capitalisation grew by A$565-million, or 31.8% following a strong result for the first half of 2016, as well as an increased dividend. Investors were also factoring in forecast strong financial performance based on management’s production guidance of 700 000 oz a year over the next two years.