Today I am looking at two of the FTSE’s major movers.
Copper-bottomed qualms
With the commodities sector suffering another washout in Tuesday’s session, it comes as little surprise that dedicated copper miner KAZ Minerals (LSE: KAZ) has suffered an extra share price fall. Indeed, a 4% deficit in today’s session means the business has surrendered a colossal 62% of its value since the start of 2015 alone.
And further economic indicators today suggest additional heavy weather could be in store. Latest Chinese export data showed shipments slide for their fifth straight month in November, this time by a chunky 3.7% on a yuan-denominated basis.
Sure, shipments of refined copper into the country may have ticked 8.7% higher last month, to 460,000 tonnes, but this represents nothing more than bargain hunting amid subdued metal prices — ‘Doctor Copper’ slumped to fresh six-year troughs below $4,500 per tonne recently.
Instead, investors should treat the decision by Chinese smelters to slash 350,000 tonnes of output in 2016 as a more accurate picture of the copper market imbalance. And a slew of further economic releases from Beijing in the coming weeks are likely to add to today’s worrying export data, and the possibility of further share price falls across the mining and energy sectors.
KAZ Minerals cheered its shareholders last week with news of maiden copper from its Aktogay asset in eastern Kazakhstan, a project that will produce a total of 105,000 tonnes per annum for 10 years from 2017.
But with KAZ Minerals facing a backdrop of subdued metal prices, whilst also battling a $1.85bn net debt mountain, I believe the mining play remains a precarious stock selection. After three consecutive earnings falls, the business is finally expected to slip to losses of 2.1 US cents per share in 2015. And I would not back KAZ Minerals to snap back into the black any time soon.
Mighty medical potential
Pharmaceuticals giant ImmuPharma (LSE: IMM) did not face such troubles in Tuesday trading, however, and the business was last dealing 15% higher from Monday’s close. The London firm has proved quite the tearaway following positive testing news yesterday, adding to the 18% advance punched in the previous session.
ImmuPharma announced at the start of the week that it had opened its first US sites for patient recruitment as part of critical Phase III testing of its lupus treatment Lupuzor. The drugs giant plans to open ten facilities in the country and a further 35 in Europe, with trials due to run up until 2017.
ImmuPharma’s Lupuzor is seen as a potential game-changer in the battle against the auto-immune disease, making the business a possible earnings hit in the years to come. But of course the nature of drugs testing is fraught with peril, with testing setbacks resulting in huge revenues losses and escalating development costs.
With no revenues to offset stonking R&D expenses, ImmuPharma is expected to swallow further losses of 7.5p and 7.6p per share in 2015 and 2016 correspondingly. But for bold investors I believe the company’s long-term growth outlook is certainly worth checking out.
