Bank of England
Apparently it was expected that this week the Bank of England would keep interest rates on hold at 4.5%. The fact that this was expected apparently makes the decision perfectly fine. The apparent reasons for this state of affairs certainly are not.
It is pathetic that the BoE has said that rates have not been reduced due to uncertainty over tariffs. Indeed, such uncertainty should be a driver to cut rates in order to mitigate the potential costs / harm that tariffs might do. It gets worse of course.
This is because we are in the aftermath of the pandemic stamp duty holiday / near zero interest rates. that would have sucked thousands into buying their home / changing homes, only now to find their fixed rates going from up say 1-2% to 5% plus. This was wholly the fault of the government / Bank of England, who sucked people into the housing market, and now risks them being spat out. The BoE continues to reiterate its moronic mantra of having a duty to keep inflation low, when since the new government came to power in July, it has been the main driver of inflation inducing policies, massive borrowing, and crackpot tax rises. The sad thing is that workers in the public sector are still chomping at the bit for wage increases to make up for all of this, when even 10% rises would not help.
Can You Spare A Dime?
One of the aspects of discussing economic matters is that very often they seem to be far away, someone else’s problem, and somewhere else. Therefore it has been something of a shock for the reality of the financial squeeze on people to arrive close to home. Anyone operating in the small cap area of the stock market will be more than familiar with how tough the situation is financially, far more tough than companies let on. That said, the bell tolls on a daily basis regarding companies leaving the stock market. But on a personal level a couple of people asking me for cash to tide them over for the next month or two was something I did not see coming. Indeed, I am not even sure if it was a wind up. Certainly it is a sign of the times, and given the current economic trajectory, likely to become more and more common. At the same time I received a call from a tech company CEO friend who informed me that after three years he has decided to liquidate his business. This is after for much of that time leading the business from the front, and working 80 hours a week. It also affected his health in a dangerous way, something that people who hate entrepreneurs and the rich forget as the cost of building a business.
This Week’s Risers On News
There was relief all round at Pri0r1ty Intelligence Group (PR1), as it came up with the revenue generating news that the market has been waiting for. On Tuesday it said it has secured a significant contract with Leukaemia Care, one of the UK’s leading blood cancer charities, worth up to £100,000. Shares of PR1 listed at 13p and fell to 3p before the news this week. It could be argued that if the group’s first RNS had been this one, the shares would actually be trading above 13p. Indeed, the rebound has been so sharp, one can see a return to 13p from 7p now in coming weeks. There was a decent rebound in shares of Ten Lifestyle Group (TENG), the global concierge technology platform, which despite being “global” does not yet have the investor engagement it perhaps deserves. Nevertheless, the shares were up a quarter off the back of expecting to report half year Net Revenue1 of c.£31.8m, 3% ahead of the first half of the prior year (H1 2024: £30.9m) and 5% ahead at constant currency.
Even less on the radar is Coral Products (CRU), but here the plastic products maker won a contract for the supply of ice cream and food containers. This could represent sales of between £1.5 million and £2.0 million a year.
Stocks Rising On No New News
This is the category of the week in small caps article which I like the most, as given that we are in one of the worst bear markets in London, no one is going to invest or trade unless there is a very compelling reason to do so. For instance, even though it has already multi-bagged, shares of US focused critical metal explorer Guardian Metal (GMET), even after its major shareholder Power Metal (POW) sold out some of its holding recently. Indeed, POW shares continue to not reflect the value it has released , or indeed, the value of its many projects. The market remains convinced the US government is going to provide financial assistance / grants to the space in which GMET operates in order to secure non-China supply, especially given the geopolitical situation. GCM Resources (GCM), the AIM traded mining and energy company managed a near 40% rise on no news, and we have not had anything significant from the company in nearly 2 months. Tower Resources (TRP) has continued to be a firm market since its Namibia and Cameroon update earlier this month, with license news in the former country and a drilling update in the latter.
Key Stocks Of The Week
Given the ongoing drain of stocks from the London market, which the powers that be continue to do nothing about, and get irate with anyone who complains about this state of affairs, it makes the new entrants to the market all the more welcome. I interviewed Wellnex Life (WNX), the day before the consumer and wellness brands group’s admission to AIM and first day of dealings. Unlike many of the recent microcap entrants, WNX has the potential to be a scalable, international group. Also on Friday, we had Citius Resources trading as Harena Resources (HREE) for the first time. The sizzle here is that HREE is a rare earths ionic clay play, something which should be front and centre going forward given how important rare earths are to the defence industry.
As well as the new entrants, there was plenty to choose from among some of the more familiar small cap faces. For instance, Predator Oil & Gas (PRD) rebounded after an Oak Securities research note pointing to a 148p price target versus 3.5p currently. While the market was clearly disappointed with MOU-5, the company maintained it could farm out the project, and has plenty to shoot for in terms of the rest of its portfolio. This is especially the case in Trinidad.
It has certainly been a mixed month at tin focused Rome Resources (RMR). While tin itself has rebounded in price, all eyes have been on the geopolitical position in DRC, and how it affects the company. This is even though the company announced a 148m copper intersect earlier this month, expanding the large-scale polymetallic potential at Mont Agoma. Those who are prepared to look past the conflict in DRC could see a significant move in the shares should any positive noises come through of an improvement on the ground, something which the latest news that DRC M23 rebels are to withdraw from Walikale as a peace gesture.
A situation which continues to be something of a head scratching one in terms of the share price, is Blencowe (BRES). While the shares rose marginally on Friday off the back of news that the National Environmental Management Authority (NEMA) of Uganda has approved its revised its ESIA for an enlargement of the Orom-Cross graphite project.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
If anyone reads this article found it useful, helpful? Then please subscribe www.share-talk.com or follow SHARE TALK on our Twitter page for future updates.
Terms of Website Use
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned
