Why Shares In Kazakhmys plc Jumped

Kazakhmys plc (LON: KAZ) gets boost from news currency will be devalued in key production area.

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Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: Shares in Kazakhmys (LSE: KAZ) — the London-listed miner focused on copper production — jumped by 25% to 221p in early trading this morning, making it easily the biggest riser in the FTSE 250.

So what: The Kazakh central bank announced today that it will allow the country’s currency, the Tenge, to devalue by around 19%. For Kazakhmys, which has around 75% of costs in the country, this has come as welcome news. For an expensive, labour-heavy workforce, the short-term benefits will be significant.

Now what: The company is presently focusing on developing two copper projects, Bozshakol and Aktogay, with the aim being to turn into a lower cost producer that gets the bulk of its production from open-pit mines.

Analysts are still expecting the company to report a loss — £38m this year, and £70m the year after — so as far as a turnaround goes, we’re only looking at those losses being reduced.

In addition, the last time there was a currency devaluation in 2009, the result was a sharp 50% hike in inflation over the following nine months. Over the medium-term any initial benefit should be eroded.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Mark does not own shares in Kazakhmys.

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