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Weekend Roundup - Markets face up to reality (panic)

Returns of selected markets; over one week and since 1st January. This week Sorted by the last week. Sorted by year-to-date can be found at the end of this post.

Some savage moves last week. Investors started to appreciate the gravity of the disaster unfolding in Eastern Europe. Markets began to price in the economic repercussions of Russia’s invasion of Ukraine. The main problem is, it is extremely difficult to predict exactly what, and how severe the consequences will be in the short to medium term. Inflation, already a problem, is going to get a whole lot worse.

Last weekend I said: “Quite what this tells us about the next month or so, I’m not sure, but my instincts are that we are still in a “sell the rally” market rather than a “buy the dips” market.”

Yesterday, it felt like there were a lot of towels were being thrown in, as investors headed for the exit at any price. Valuations are starting to look a lot more attractive, but I think in many cases, there is still more downside. Valuation compression is a feature of a proper bear market - the distribution between the highest and lowest rated stocks narrows significantly to the point where nearly every stock is virtually on the same rating. That gives long term investors the opportunity to buy fantastic high quality growth companies at bargain prices. We are not there yet but I’m drawing up my list.

Last week it was all about commodities, with Brent crude up 24.7% and strong moves by industrial metals. Continental European markets were hit hard with double digit falls. The UK suffered less and the US even less - the S&P 500 was down only 1.3%.

Gold on the move again and the US$ gaining against both the euro and sterling. Sterling fared better than the euro and at 1.2103 is at its highest since 1st July 2016!

The JIC Portfolio ended the week down 2.7%. The FTSE All-Share was down 6.7%. Year to date JIC is down 8.1% v -7.3% for the Index. Behind the FTSE All-Share, so far this year but relatively unscathed compared to the 20.1% fall in AIM and 17.4% drop in the FTSE 250.

The JIC Funds’ Portfolio was down 1.7%, compared to -1.4% fall in the All-World Index. Year-to date, the Funds’ Portfolio is down 7.4% v -7.5% for the Index.

Last week’s big movers: Positives; Lundin Energy +15.3%, Blackrock Energy & Resources Income +10.2%, L&G Gold Mining ETF +9.4%, Global X Copper Miners ETF +7.8%, Serica Energy +7.3%.

Negatives: Supreme -14.5%, Lloyds Banking Group -13.4%, Circassia -12.0%, Somero Enterprises -11.6%, SDI Group -11.6%, SigmaRoc -11.3% and K3 Capital -10.8%.

New three-month or all-time highs last week: L&G Gold Mining ETF, Blackrock Energy & Resources Income, Global X Copper Miners ETF and Blackrock World Mining Trust, Lundin Energy, Sylvania Platinum, Anglo Pacific, and Serica Energy.

New Positive Rectangle Breakouts: None.

New three-month lows last week: Blackrock Throgmorton, JPMorgan Emerging Markets, Blackrock Greater Europe, Chelverton UK Equity Growth, Smithson, Premiere Miton UK Smaller Companies, Temple Bar Investments, Renew Holdings, SDI Group, SigmaRoc, Supreme, Circassia, Lloyds Banking Group, Bioventix, Somero Enterprises and K3 Capital.

New Negative Rectangle breakouts: SigmaRoc, Somero Enterprises and Supreme

Trades: In the JIC Portfolio, I sold Central Asia Metals on Monday and switched all the proceeds into Global X Copper Miners ETF. On Friday, I added to SigmaRoc.

News: CentralNic results, acquisition, placing and open offer on Monday and K3 Capital acquisition on Tuesday.

Ex-dividends: Sylvania Platinum went ex its windfall 2.25p per share on Thursday.

Next week: Somero Enterprises results on Wednesday and I think, Blackrock World Mining, where the final dividend announcement is of interest. Temple Bar Investments goes ex-dividend 10.25p per share and JP Morgan Emerging Markets, 0.52p per share.

Cash: Now at 1.9% in the JIC Portfolio and 12.7% in the Funds’ Portfolio.

My six commodity holdings in the JIC Portfolio make up 48.6% of the JIC Portfolio at last night’s close. The challenge over the coming weeks and months is timing the switching of a large proportion of this into the best examples I can find of “quality at the right price”.



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