Advisory firm Deloitte reported last week that the market capitalisation of Western Australia-listed companies that comprise the Deloitte WA Index fell by 2.6% to close April at A$142.5-billion.

This continued downward trajectory, following a 6.4% decrease in March, wiped out all gains made by the Deloitte WA Index in the opening two months of the year and was largely due to commodity price falls and lower-than-expected Chinese gross domestic product growth, Deloitte said.
“Continued pressure on commodity prices during April maintained the negative market sentiment impacting on the Deloitte WA Index. The decreases experienced in March were of such a quantum that they impacted on the market across the board; however, April’s performance differed sector by sector, with energy-related stocks typically being more resilient than mining, and certain nonresource-related sectors, including financial services and education, performing well,” said Deloitte lead audit partner Tim Richards.

Commodity prices decreased across the board during April, with gold and silver prices falling by 8% and 14.7% respectively.

Richards noted that investors continued their return to equity markets, looking for higher yields as opposed to safer, lower- yielding assets such as gold bullion, reflecting improved confidence in the global financial markets.

He said this market sentiment was evidenced by Goldman Sachs’ forecast in early April that the gold price would decrease to $1 200 over the next five years. The continued decreases in the gold price also maintained pressure on silver – another safe-haven metal.

Palladium decreased by 9.2% and tin fell by 12.3%, trading at historically low prices. The continued decreases in tin prices followed a slight rebound in March as customers took advantage of the lower prices to increase stockholdings, Richards said.

Brent crude prices fell by 6% over the course of the month as a result of softening demand. Additionally, an increasing number of commentators believe that Saudi Arabia, traditionally the only country in the world with the ability to cut production to support prices, is in the process of losing control of oil prices.

In contrast to the majority of commodities, iron-ore prices performed well, given the overall negativity surrounding commodities, experiencing a fall of only 0.7% over the course of the month.

Meanwhile, the movers and shakers for April included Elemental Minerals, with a 44.8% increase in market capitalisation, from A$84-million to A$121-million, following the receipt of a A$160.8-million indicative, nonbinding acquisition offer from Dingyi Group Investment, a Hong Kong Stock Exchange-listed company.

Dingyi is an investment company with interests based primarily in Hong Kong and mainland China, and is controlled by Li Kwong Yuk, a Chinese entrepreneur who controls a number of other mainland China and inter- national business interests in sectors including infrastructure, real estate, financial institutions and natural resources.

The proposal was the outcome of Elemental’s plan in June last year to explore strategic alternatives for the company.