In today’s briefing:
- POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
- Rex Minerals (RXM AU): Scheme Vote on 10 October
- Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight
- Rex Minerals (RXM AU): 10th Oct Vote On Salim Group’s Offer
- [US Crude Oil Options Weekly 2024/35] WTI Crude Oil on a Downward Trend as Demand Concerns Persist
- [US Nat Gas Options Weekly 2024/35] Henry Hub Rebounds on Hot Weather but Excess Supply Limits Gains
- PetroTal Corp (AIM: PTAL): Potential Reserve Addition
- Sustainable Investing Surveyor – Focus on LiTHOS Group Ltd. (LITSF)
POSCO’s Early EB Payoff and Post-Value-Up Pivot Trading Angles
- Key watchpoints: Will POSCO cancel the 3.4% treasury shares in Q4 and how will they replenish cash reserves after paying ₩1.5 trillion? Their moves could set trends.
- POSCO might cancel these shares to boost their value-up index weight. This could drive up the stock price, giving them an opening to improve their cash position through equity financing.
- Expect a short-term stock pivot with value-up index and ETFs driving inflows and price pops. After this, equity financing may signal stock peaks, with POSCO and others leading the trend.
Rex Minerals (RXM AU): Scheme Vote on 10 October
- The Rex Minerals (RXM AU) IE considers MACH Metals Australia’s A$0.47 offer fair and reasonable as it is towards the upper end of the A$0.346 to A$0.484 valuation range.
- The key conditions are shareholder and FIRB approvals. FIRB approval should be forthcoming as Salim is the largest shareholder and the cordial Indonesia-Australia relations.
- An attractive offer, medium retail ownership and no independent substantial shareholder ensures a done deal. At the last close and for the 30 October payment, the gross/annualised spread is 3.3%/15.9%.
Recessionary Signals as SPX Tests Resistance; Downgrading Energy to Underweight
- Price action on SPX is extremely similar to prior major topping patterns in April 2000 and August 2007, which is why we recommended reducing risk near 5670-5783 last week.
- Additional similarities to 2000/2007 (other than price action) include the Fed cutting rates, recession indicators such as the Sahm rule and Schannep Recession Indicator (SRI) triggered, and yield curve un-inverting.
- SPX resistance is in the 5670-5783 range; if a major top is happening, that is where it would start from (using the 2000 and 2007 tops as comparisons).
Rex Minerals (RXM AU): 10th Oct Vote On Salim Group’s Offer
- Back on the 8th July, copper-gold play Rex Minerals (RXM AU) entered into a Scheme with MACH Australia. MACH, a wholly-owned entity of Indonesia’s Salim Group, at A$0.47/share, in cash.
- That’s a 71% premium to last close and a decade-high. The Offer has unanimous board support. Apart from Rex shareholder approval, the Offer requires FIRB signing off.
- The Scheme Booklet is now out, with a Scheme Meeting to be held on the 10th October. Expected implementation on the 30 October. The IE says fair & reasonable.
[US Crude Oil Options Weekly 2024/35] WTI Crude Oil on a Downward Trend as Demand Concerns Persist
- Despite a strong start, WTI prices fell 1.7% for the week ending 30/Aug, as demand concerns outweighed the worries of supply disruptions in Libya.
- WTI options Put/Call volume ratio increased to 1.72 from 1.13 the week prior as put volume increased 45.6% WoW while call volume declined 4.5%.
- WTI OI PCR increased to 0.78 (30/Aug) from 0.75 (23/Aug) as call OI rose 4.5% WoW and put OI increased by 8%.
[US Nat Gas Options Weekly 2024/35] Henry Hub Rebounds on Hot Weather but Excess Supply Limits Gains
- US natural gas prices rose 5.2% for the week ending 30/Aug, driven by warmer weather forecasts and low prices encouraging power generators to favour gas over coal.
- Henry Hub Put/Call volume ratio fell to 1 from 1.34 the previous week as put volumes dropped by 38.5% WoW, while call volumes declined by 17.5%.
- Put OI rose for expirations in Sep, Oct, and Nov, while call OI increased for contracts expiring in Dec, Jan, and Feb.
PetroTal Corp (AIM: PTAL): Potential Reserve Addition
- The VS1 sand has produced ~320 bbl/d of 18.6 API oil during a brief test of a sidetrack of Well 20H.
- The oil gravity is similar to that found in the VS2 reservoir.
- The VS1 reservoir has not been developed to date as the company has only focused on the VS2 that has much better permeability.
Sustainable Investing Surveyor – Focus on LiTHOS Group Ltd. (LITSF)
- The WTR Sustainable Index was down 0.7% W/W versus the S&P 500 Index (up 0.2%), the Russell 2000 Index (flat) and the Nasdaq Index (down 0.7%).
- Energy Technology (13.7% of the index) was down 2.2%, while Industrial Climate and Ag Technology (46.6% of the index) was up 0.4%, ClimateTech Mining was down 1.3%, and Advanced Transportation Solutions (20.3% of index) was down 1.6%.
- Top 10 Performers: FSR, BNRG, ELBM, EXRO, NHHH, HCNWF, EZGO, NEOV, IONR, MXL
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