Thursday 26 November 2015

Top Tweets Today: 26/11/2015

Following a general end of year weakness in 2014, commodities and stocks in producers have been hammered this year with some big names collapsing in a heap with the latest victim Anglo American receiving an onslaught from investors fearing the worst. Glencore has been the main focal point up until recently as HSBC warned that Anglo's is burning through cash reserves and advised that it suspenses dividends.

The company has been engaged in restructuring but hasn't plug the many holes leading to liquidity issues that's also being faced by the mining industry as a whole that's been battling a fall in commodity prices combined with overcapacity.

It seems as if concerns are coming from the camp where clarity is needed as to how management intends to deal with the matter, much the same sentiment that was felt by Ivan Glasenberg and his management team over at Glencore.

I think we are far from a bottom in these stocks given the level of fear surrounding which we'd need to taper off a considerable amount before any confidence can be injected into them but as prices continue to fall, long term opportunities are presenting themselves in hordes providing investors who are savvy enough to be patient for this sentiment to blow over and pick the right company with excellent management to return a healthy performance for a decade to come.
The love hate relationship between Russia and Ukraine continues as an attack on an electricity pylon left most of the region of Crimea in darkness as Ukrainian nationalists fight to secure the area back from Russia who annexed it in March 2014.

As a result of Russia's preoccupation in Syria, these attacks are met with mere snide remarks over the expressed intentions of these actions if it's only used to cause disruption to the people whom it wishes to liberate from the clutches of Russian hands.Added to this Russia's current state of play in winning over support once again from the West which would only serve to damage the diplomatic work already done.

Russian state owned gas supplier Gazprom has cut all gas supplies to Ukraine as a result with not much reaction yet from Ukraine , it seems a much lighter retaliation than war. However after weighing up the merits of Russia responding to Turkey's downing of a fighter jet as improbable, what would the outcome look like if the Kremlin were to turn it's attention to Ukraine and escalate matters?

Although it's very unlikely as is the case in Turkey, it does point to a rather tense situation building up in the southern parts of Europe and the Middle East, hardly something that would move the ticker of confidence in that region. I find it fascinating how one leader, namely Putin, has sown the seeds of discord in a relatively short span of time putting into question the true intentions of his leadership and whether stability would ever return under his reign as leader.
Problems at Eskom SOE, the national owned electricity supplier in South Africa, seem to be getting worse as the company battles to find debt offered at a low enough interest rate so as to not put further pressure on an already strained revenue model unable to produce sufficient profits that would be needed for it to be capable of increasing infrastructure to meet demand.

Management says it will find other sources of funding besides foreign issued bonds after international rating agencies have lower it to junk bond status.

There's an easier way to solving this dilemma in using the same model as German has implemented which would spread the risk amongst millions rather than just one entity but it would seem as if policymakers don't feel comfortable with the idea.  

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