29. September 2021 | 13:50 CET
Allianz, MAS Gold, Alibaba, Tencent - Better get the sheep in the dry!
The gold price fluctuates with every political news as rarely before. After a good end to 2020 and a conciliatory May, it has been going down again since summer. After USD 2,074 last year, we are already USD 340 lower today, although the political and economic stability has deteriorated. The reason for this is that since the beginning of the pandemic, public budgets have undergone a veritable debt explosion. Inflation is now palpable, and this would be the breeding ground for a value-preserving precious metal investment. Are there other safe havens besides gold?
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ISIN: ALLIANZ SE NA O.N. | DE0008404005 , MAS Gold Corp. | CA57457A1057 , ALIBABA GR.HLDG SP.ADR 8 | US01609W1027 , TENCENT HLDGS HD-_00002 | KYG875721634
"[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Lightning on the horizon
Global investor behavior follows a trade-off between greed and risk aversion. In the last three years, the risk appetite has certainly been high, so that in the environment of low-interest rates, any form of investment seemed suitable for increasing wealth. There were multi-year highs in equities, real estate and even bonds, which are somewhat under discussion in the current environment. The investors' appetite for risk has dimmed somewhat over the past few weeks.
One possible disruptive factor is the lightning from the domestic real estate side. China Evergrande has accumulated debts of over USD 300 billion and is struggling with interest payments. In addition, another 20 or so real estate companies have been sucked into the downward spiral. We remember: In 2006 and 2007, the signals from the real estate market were also ignored at the time. Then the US subprime bubble burst, and just 2 years later, the markets had lost over 50% in value. With the collapse of the investment bank Lehman, a severe financial crisis followed. The question is allowed: Is such a scenario possible again?
Allianz - Caution at the platform edge
When it comes to security, investors regularly go into overdrive when it comes to the Allianz share. A high intrinsic value, solid growth and an outstanding return and this has been the case for years. The investment subsidiary AGI now manages close to USD 2.5 trillion, which provides permanently stable management fees. Estimates for Allianz SE in 2021 are revenues of EUR 144 billion and EBIT of EUR 12.5 billion, with a dividend yield of 5.4%. A sell-off on the bond market could be dangerous for Allianz because this is where the policyholders' money is invested. The insurer is also very active in the real estate sector.
According to the current balance sheet, the share is quoted at EUR 196, directly at book value. Now we have to see where the journey will take us. From a chart perspective, a sell-off below EUR 190 is threatening in the direction of EUR 170 and lower. That will make many fans tremble a bit at the moment. Conclusion: The EUR 223 high may not light up for a long time in the current environment, but it is always worthwhile to buy the Allianz share during sell-offs. The book value provides good information on over- and undervaluation phases. Unfortunately, it can only be calculated after quarterly reports.
MAS Gold - Small but nice
The willingness to sell in the precious metal markets is particularly noticeable in the world's largest gold ETF SPDR Gold Shares; the amount of gold it holds has decreased from 1,171 to 990 tons since the turn of the year. And also, this week, the precious metals were again on the sell list. From the current point of view, it makes more sense to focus on projects that do not depend on the spot price but imply a long-term potential value.
Such an investment could be the still relatively small Company MAS Gold. The attraction of this Canadian explorer lies in its difficult framework conditions because there were some disputes in the ownership structure to be clarified. These are now off the table, and the management around mining expert Jim Engdahl is going public again.
The property of MAS Gold is located in Saskatchewan, Canada. This province has been shining for years with good legal framework conditions for raw material companies. MAS Gold has now reached an agreement with the Saskatchewan government to acquire a 100% interest in the approximately 463-hectare Contact Lake property, including the former producing gold mine operated by Cameco Corp. in the La Ronge greenstone belt from 1994 to 1997. The Contact Lake mine site is located only 10 km from MAS Gold's North Lake deposit and is an important new addition to the hub-and-spoke mining concept. Significant underground development remains at the old mine site that can be reprocessed, including a 6 m by 4 m ramp to a depth of approximately 340 m and six main levels and several sub-levels.
MAS Gold has a substantial non-digitized database for the Contact Lake gold deposit. Upon closing the acquisition, it will immediately begin digitizing the data to enable preliminary modeling that will serve as the basis for new exploration and confirmation drilling along the trend of the Baku Gold Zone. Upon completion of the transaction, MAS Gold will commence a surface drilling program.
With currently 116 million shares, the Company is valued at only CAD 13.3 million. Since the value is already set very low, MAS Gold can undoubtedly withstand a longer lean period on the stock market because the team starts with excellent prospects.
Alibaba Group and Tencent - Is this already the end of the super correction?
Months of sell-off and no turnaround? Since the beginning of November 2020, Alibaba shares have fallen to EUR 124 without much resistance. A 10-month loss of more than 50% now weighs on the books of Internet investors. The situation looks a bit better for Tencent; the share has lost only 39% since the highs. What is going on with the former stock market darlings?
For months, Alibaba Holding has been in trouble with the Chinese regulator, who wants more say and transparency in all deals. The IPO of Alibaba's financial division was banned entirely due to objections from the authorities, and the Company's founder Jack Ma was even on the wanted list for a short time. In the case of Tencent, it is the training platforms that are giving the regulator a hard time. In order to increase transparency and prevent market dominance, it has now been decreed that the companies must grant each other access to their platforms.
One result has already been reported: Alibaba is granting its rival Tencent more and more rights on its services. Who ultimately benefits more is not yet entirely clear. Among other things, Alibaba has integrated Tencent's payment option WeChat Pay into its app for food deliveries and on the ticket seller Damai and the import platform Kaola, among others. Soon, WeChat is also expected to be available on Alibaba's shopping platform Taobao. Conversely, Tencent has allowed linking to content from competitors on its WeChat app for several weeks.
The Alibaba share started to turn around yesterday but was slowed down by the generally poor mood on the markets. At just under EUR 134 early in the morning, it slowly headed south again throughout the day. In contrast, the Tencent share has held steady above the EUR 50 mark for days. From a chart perspective, Alibaba was able to turn upward at EUR 123.60, but the EUR 150 mark would have to fall for a sustainable increase. Both shares are technically very battered and therefore only worth regular observation.
In difficult times, good advice is expensive. Yesterday, the stock markets sent strong sell signals, which can also have a medium-term effect. Allianz and Alibaba are large blue chips that offer an entry opportunity at low prices. At MAS Gold, a significant jolt could go through the low price at any time with appropriate exploration results.