April 13th, 2022 | 17:59 CEST
Commerzbank, Kodiak Copper, NIO - Unstoppable trend
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"[...] If we pursue our goals conscientiously, the market will adjust its valuation accordingly, I am sure. Often, all it takes is a trigger. [...]" Ryan McDermott, CEO, Phoenix Copper
Kodiak Copper - Significantly oversubscribed
The demand for copper is enormous and will continue to increase due to the switch to renewable energies and electromobility. Demand for the red metal has already exceeded supply since 2019. In contrast, there is a lack of attractive production sites due to investment restraint in the past decade. One flagship project is owned by the Vancouver-based exploration company Kodiak Copper. Kodiak is focused on its copper porphyry projects in Canada and the US, with the most advanced being the MPD copper-gold porphyry project in south-central British Columbia, Canada. Here, the Company already discovered high-grade mineralization within a broad mineralized envelope in 2020. In addition, Kodiak Copper owns the Mohave copper-molybdenum-silver porphyry project in Arizona, where the first drilling program is expected to start this year.
The past fiscal year saw the most extensive drilling program in history, covering 21,675m in 36 drill holes, a prospecting and trenching program involving 1,755 soil samples and 176 rock samples, as well as IP surveys, geological and geotechnical studies and ecological surveys. For the current year, Claudia Tornquist, President and CEO of Kodiak, announced an even larger exploration campaign on MPD. The program is expected to amount to approximately 25,000 meters of drilling. The primary objective is to expand the gate zone.
For the further exploration steps, the Canadians are well equipped with a cash balance of about CAD 18 million to further develop the MPD project. That MPD is more than an attractive project is indicated by the financing closed at the end of March on a bought deal basis and the non-brokered private placement. With gross proceeds totaling CAD 9.6 million, the latter was significantly oversubscribed and met with keen interest from new institutional investors. Of particular note is that previous major investor Teck Resources exercised its participation rights to maintain its 9.9% interest in Kodiak. In addition, several insiders participated in the financing alongside Chairman Chris Taylor.
From a chart perspective, the picture has brightened considerably. A breakout above the resistance at CAD 1.80, equivalent to EUR 1.31, could trigger a massive buy signal that could push the value above the EUR 2 mark. In view of the further rising copper price due to scarcity, Kodiak is becoming increasingly attractive.
Commerzbank and Deutsche Bank - Run slowed down
According to the survey of the economist's panel that the Ifo Institute and FAZ together produce, economists expect an average inflation rate of 4.4% for Germany in the current year. The ECB's inflation target is just under 2%. The European Central Bank should therefore start fighting inflation immediately, say 75% of participants. 69% consider an interest rate hike the most appropriate measure. "Russia's war against Ukraine has added another driver to already high inflation," says Ifo researcher Niklas Potrafke. "The ECB should now finally raise interest rates and thus help curb inflation."
In theory, there is a clear description of which sectors benefit from rising interest rates and which suffer: Sectors with traditionally high debt levels see their profits fall more than those with low liabilities. And banks benefit as interest margins widen. When the interest rate hike fantasy hit the market, especially in the US, German financial institutions, Commerzbank and Deutsche Bank also rallied sharply as a result, both posting new four-year highs. Then came the invasion of Russia and concerns about full loan books from Ukraine and especially Russia. However, the risks turned out to be smaller than the broad investor community had suspected. Currently, however, both major banks are struggling with the same problem and lost about 8% in stock market value after the publication.
In one placement, around 116 million Deutsche Bank shares changed hands at a price of EUR 10.08, just under 8% below yesterday's share price. At the same time, 72.5 million Commerzbank shares changed hands at EUR 6.65, just under 7% below yesterday's closing price. In total, the undisclosed seller raised around EUR 1.75 billion. Currently, only two investors own enough shares in Deutsche Bank to carry out such a large sale - BlackRock and Capital Group.
NIO - Covid puts the brakes on
At NIO, it is not the major investor putting the brakes on, but rather the Corona pandemic. Accordingly, the Tesla competitor had to stop the production of its e-cars. The Chinese company announced that several suppliers in Jilin, Shanghai and Jiangsu have stopped their production due to the effects of the pandemic. Since the end of March, assembly lines have also been at a standstill at Tesla's Gigafactory in Shanghai, resulting in a loss of production of around 2,000 Model 3 and Model Y.
In addition, NIO announced price increases for various models. The prices of the three SUVs - ES8, ES6 and EC6 - will increase by approximately USD 1,572 effective May 10. In contrast, the ET7 and ET5 electric sedans still cost the same. The news was met with losses on the stock market. After falling below the USD 20 mark, there is a threat of closing the price gap at USD 15.35.
Inflation will accompany us even after the possible end of the Ukraine conflict. Due to the energy transition, the economy needs a tremendous amount of copper. Kodiak Copper owns one of the most promising deposits in North America. Deutsche Bank and Commerzbank could become interesting at current levels. With NIO, one should observe the situation first.
Conflict of interest
Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.
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