29. July 2021 | 08:48 CET
Alibaba, Kainantu Resources, Yamana Gold: Asian Investments? Here is how it goes!
Asia is the boom region par excellence. However, China, in particular, has weakened in recent months. For years, China was considered an anchor of stability for the region - and even the world. Since February, however, Chinese shares have lost around EUR 1 trillion in market value. The market is speculating about US capital controls, which could hit China in particular. The restructuring of China's education system, which many private providers are suffering from, is unsettling. We explain why long-term investors need not fear.
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ISIN: ALIBABA GR.HLDG SP.ADR 8 | US01609W1027 , Kainantu Resources Ltd. | CA48301H1073 , YAMANA GOLD INC. | CA98462Y1007
"[...] We knew the world was rapidly electrifying and urbanising and needing significant amounts of copper to do so. [...]" Nick Mather, CEO, SolGold PLC
Alibaba: Is the stock coming back?
An example of a company that also got caught in Beijing's crossfire last year is Alibaba. The uber-powerful Amazon clone wanted to take its fintech subsidiary public - and failed under pressure from Beijing. For months, the stock rode a roller coaster. But whoever observes Beijing's actions more closely will see that although the central government pursues and implements its plans unswervingly and consistently, it always has the good of the economy in mind. We have to note that a stock like Alibaba has lost 26% over the course of a year, but we should not turn our backs on it. Instead, the price losses are a reason to watch the stock even more closely.
Asia remains a boom region. The Chinese move away from the one-child policy offers enormous opportunities for consumption. As more and more families are earning good money simultaneously, stocks like Alibaba should continue to profit. Although rumors are currently doing the rounds that some US funds are throwing shares from China onto the market, such rumors are not infrequently launched by interested parties. The fact is, Alibaba is a powerful company and is significantly cheaper today than it was a year ago. Any further sell-off is an opportunity for investors who can grab it spiritedly.
Kainantu Resources: EUR 13.4 million and lots of perspective
The shares of Kainantu Resources could also become such an opportunity. The share has traded between CAD 0.19 and 0.395 over the past year. Currently, the value is hovering around CAD 0.23. Kainantu Resources aims to become a platform for mining activities in the Asia-Pacific region. In addition to an experienced management team familiar with the region, the Company also has a partnership with Asia Pacific Energy Ventures, which is well networked within Asian countries and should thus reduce country risks for Kainantu. Kainantu operates two early-stage gold projects in Papua New Guinea, located near the K92 gold mine and on the same geological trend.
With a market capitalization of only EUR 13.4 million, Kainantu Resources is an exciting investment target for speculative investors. While the gold sector is currently trending sideways, it can be a good idea to get a foot in the door with speculative small caps - when the market turns, prices often move up quickly. Kainantu Resources still had CAD 3.5 million in cash at the beginning of March. The financing of the early-stage projects should therefore be secured for the coming months. The stock is an exciting combination of early-stage gold exposure and the Asian fantasy that continues to be latent.
Yamana Gold: The concerns of smaller producers
One stock that may sound Asian, but does not have much to do with it, is Yamana Gold. The Company is a mid-tier gold producer and also has copper and silver in its portfolio. On Thursday, Yamana will present figures for the last quarter. Analysts were expecting earnings to be down about 20% in advance but revenues to be up. Full-year profit could be slightly below last year, analysts said. In the past three months, the stock lost 11.3%. On a one-year view, it went down 37%. Given this development, one must think that Yamana does not bring enough operationally to break away from a sideways trending gold price. Arguments for rising prices could be growth. Instead, Yamana currently seems to have to fight for its margins.
Especially for smaller and medium-sized producers like Yamana, lower grades or minor problems in mines quickly become important and spoil the quarterly figures. At Kainantu Resources, such issues are still far away. Assuming good relations with local authorities, Kainantu can let drill results speak for themselves. Given the current market capitalization, these should also leave their mark on the share price. Alibaba also looks good in the long term. The sell-off could continue for a while, but the Company remains healthy.