Monday, 14 September 2015

Top Tweets Today: 14/09/2015

Another day another prediction with today being financial magazine Barron's turn to take a stab at calling Alibaba to sink another 50% from its current levels over concerns about the lack of growth coming from the Chinese economy.

The company, who listed last year October has had a tough time proving its earning credentials amongst US investors as it struggles at levels lower than its IPO price. China's biggest online retail company is suffering from a downturn in economic growth that's put a damper on this diamond in the rough.

However Twitter was abuzz as per usual with some calling this a chance to grab a bottom. In this particular tweet below, one person reminding us that the finance magazine had called the same fate for then struggling social media company Facebook, which subsequently marked the bottom.

In my opinion I think generally there is a degree of concern around China at the moment, something that will be with us for some time, however I feel financial news outlets thrive on sensationalism and this is just another case of it. I think we need to dig a little deeper , probably wait for some news around the company to get a true indication of what investors are feeling.    


A particular chart of interest to me was this one by Igor Marinkovic, founder and contributor on Trading Wisdoms, pointed out key levels for the platinum price. We currently hovering around the $1000 per ounce level with breaks below becoming frequent. If we were to see a significant selloff ensue it is very likely $800 will mark long term support which if you do your calculations works out to be 20%

This is becoming a scary reality for South African platinum mines as well as the South African trade balance that relies a good amount from the dollar revenue generated from the sale of platinum.

I posted this tweet in reaction to seeing the price of Lonmin which continues its decline. The platinum producer has been battling with high debt levels and insufficient cash generative sales which is concerning investors. The price ended at R4.35 (South African Rand) off by 6.25% from its previous close.

News came out late last month that the company was working with Greenhill Co on possible ways to restructure its debt so that it would be able to meet its obligation which come due next year. This helped to materialise somewhat of a bounce but not enough to hold the price steady.

With the price of platinum slumping coupled with a breakdown in its refinery causing a build up of unrefined platinum ore, the company is looking less likely to eventually pay its debts as the time to raise capital from the market fading away fast.

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