January 3rd, 2022 | 09:08 CET
Highflyers of the year sought: Alibaba, Osino Resources, Steinhoff
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"[...] 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
Alibaba and the battle with Beijing
Alibaba's stock has long been considered an insider tip and a safe bank. The retail giant was seen as a Chinese Amazon and thus benefited from the vast market in Asia and the Chinese open-mindedness towards digital solutions. But as early as 2020, the picture was tarnished for the first time. The Chinese state torpedoed the IPO of Alibaba subsidiary Ant Group. That was followed in 2021 by further repression by the Chinese state against its Internet groups and the near bankruptcy of real estate developer Evergrande. Above all, Beijing's muscle-flexing is irritating more and more investors. While excessive consumption of video games was still banned in 2021, tattoos will be at the turn of the year: anyone who wants to play soccer for China in the future must not be tattooed. Those who already have one or the other work of art on their skin will have to have it removed. While this new regulation has little to do with investment decisions at first glance, it clearly shows that the pendulum in China is now swinging towards autocracy rather than freedom.
Alibaba's share price initially rose significantly before the turn of the year, but it has since run out of steam again. Over the course of a year, the stock has lost a whopping 49%. Even in the long term, the gains of 35% over five years are rather manageable. Currently, it looks as if the stock could bottom out above the USD 110 mark, but it cannot be ruled out that the rulers in Beijing will continue to make things difficult for companies like Alibaba. The stock is not a safe bank, but investors can keep it in mind.
Osino Resources: Prepared for 2022
Those concerned with investments in gold and who have their eye on promising projects will probably already have the Osino Resources share in the back of their minds. Osino Resources operates in Namibia, on the southwestern coast of Africa. The team around CEO Heye Daun has already successfully sold a gold project in Namibia in the past. Daun sees some parallels between Otjikoto, which is now successfully mining for B2Gold, and Twin Hills, as he revealed in an interview a few months ago: "Both projects are located in the same geological belt and have a very similar geological structure. The size is almost identical, and so is the infrastructure. Differences still lie in lower gold grades and a lower recovery rate at Twin Hills. However, we want to positively influence these factors with the planned drilling program," Daun said at the time.
In the meantime, the Company has published drill results, including 257m of 0.73 g/t gold. The scope of the drilling program alone of around 116,000 meters shows in which league Osino Resources wants to play. Since the Company also has reliable anchor shareholders in the form of investors such as Ross Beaty, the team around Daun can demonstrate the feasibility of the Twin Hills project step by step. The share is currently trading below EUR 0.80 and can always jump above the euro mark. Inflation and sputtering supply chains could positively influence the investment environment for gold in 2022. Osino Resources is worth considering.
Steinhoff: What needs to happen now
Many investors are currently likely to be asking themselves whether the Steinhoff share is still worth considering. The furniture group, which spent years litigating with creditors after an accounting scandal, settled before the turn of the year. The share then shot up as if liberated. In the meantime, however, the price is crumbling again. We are now seeing what is regularly observed in investment stories such as the Steinhoff story: When an event has occurred that all investors have been waiting for for months or even years, an emptiness sets in. Steinhoff must now fill this void with perspective. It remains to be seen to what extent this can succeed in times of stuttering supply chains and with a furniture-related business model that is anything but "sexy". Steinhoff was one of the winners of 2021, but there is a high probability that this will not be repeated in 2022.
While the air seems to have gone out of stocks like Steinhoff, Alibaba is driven by several major trends at the same time that cannot be stopped any time soon: Digitization and the rise of Asia cannot be reversed. However, it is also true that the central government in Beijing has the power to put any large corporation in its place. That should continue to weigh on the exchange rate. The more political repression and crises come into play, the more exciting gold becomes. Osino Resources seems to be in a promising position to benefit disproportionately from the next upward movement of the precious metal.
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