Business Background and Investment rationale
Anglo American PLC is one of the world’s largest mining and natural resource groups. With subsidiaries, joint ventures and associates, it is a global leader in platinum group metals, gold and diamonds. It has significant interests in coal, base and ferrous metals, industrial minerals, and paper and packaging. The group is geographically diverse, with operations in Africa, Europe, South and North America, Australia and Asia.
Weak demand from china
China is expected to have shipped in 4% less refined copper in June 2008 than in the previous month thanks to high prices and weak demand, while strong domestic copper production continues to cut the need for imports. Nickel prices have fallen more than 50% on LME and are likely to drop further given China’s gloomy signals that stainless steel capacity is vastly in excess of domestic demand. Zinc prices were battered in May following the slowing demand in western markets and the large zinc surplus that’s expected this year and next. Anglo’s operating profit will fall on the back of a rebound in US dollar coupled with weak demand.
Decline in production
Production in the first quarter, particularly of platinum, palladium, rhodium and coal, was adversely affected by power supply constraints in South Africa and adverse weather conditions in that country and in Australia. Platinum, palladium, rhodium and nickel production, which accounts for more than 30% of Anglo’s operating profit, decreased by 24.2% from last year.
Technical outlook
On daily chart, stock has given a sell signal with a gap down opening and cross below 200-day EMA.MACD is negative and 12-day EMA has cross below 26-day EMA.14-day RSI is below 50 showing both RSI and MACD are making negative slope, with 14-day -DMI index crossing above +DMI showing downside on card. Stock has strong support at 3000.0p; if it breaches that level it will fall further to 2700p.
Trading strategy
The stock can be sold around 3120.0p with a profit target 2761.0p and stop loss of 3280.0p (Hedge position: Long position in spread betting with £0.5 bet per point).
Business Background and Investment rationale
National Express Group PLC is a public transport company with operations in the United Kingdom, Spain and North America. The Company’s divisions include trains, buses and coaches, and its network covers more than 1,000 destinations within the United Kingdom, including all of the major airports.
Strong demand for bus and train services
National Express focuses on providing excellent value fares which drive revenue growth for its bus and train services, particularly as soaring fuel prices encourage travelers to switch from cars to public transport. In a trading update in June 2008, revenue in the bus business increased 7%. The West Midlands saw 6% growth driven by higher patronage, fare increases and the continued strong performance of the ‘Quality Partnership’ routes. In London, Group achieved a 9% increase in revenue and the Coach network saw revenue growth of 5%. National Express expects significant increase in revenue for the first half and full year.
Fuel Hedging and improved operating efficiency
National Express has hedged all its fuel for 2008 and 47% hedged its total needs in 2009. Group is confident it will recover additional fuel costs through a combination of innovative pricing mechanisms and improved operating efficiency. In the UK, the integration of operations into a single division based in Birmingham will deliver annualised £11 million cost savings.
Technical outlook
On daily chart, NEX has cross above negative slope indicating trend reversal for the stock. MACD is positive and 12-day EMA has cross above 26-day EMA, 14-day RSI is above 50.0 showing strength in move with a positive slope. 14-day +DMI have cross above 14-day –DMI, indicating a trend is forming upside. Stock has strong resistance near 1053.0p level and if it rise above resistance can found near 1140.0p.
Trading strategy
The stock can be bought around 980.0p with a profit target 1090.0p and stop loss of 930p (Hedge position: short position in spread betting with £1.275 bet per point).
BG Group PLC
BG has fallen from rebound of 1307.0p on falling oil prices. MACD is negative and 12-day EMA has cross below 26-day EMA and RSI is just below 50 suggesting a rebound in prices. On directional index, positive 14-days DMI has cross below negative 14-day DMI indicating a downtrend. Looking at the trend and falling prices it is better to exit at 1250.0p.
British Sky Broadcasting
British Sky Broadcasting has made 52-week low on daily chart. MACD is negative and very near to an historic low. 14-day RSI is near to 30 and stochastic is below 10.0 indicating oversold. On directional index, positive 14-days DMI has cross below negative 14-day DMI indicating a downtrend. Oversold condition stock should be hold with an exit target of 471.0p.
UK Coal PLC
UK Coal PLC is the most resilient stock in the mining sector. Stock prices have fallen in a triangular pattern giving a target of 473.0p. MACD is negative and 14-day RSI is below 50 indicting weakness and trend is downward. Stock should be hold and sold on upward rally with an exit target of 540.0p.
BATS PLC
British American Tobacco on daily chart is rebounding from 52-week low. MACD is negative but 12-day EMA has cross above 26-day EMA indicating a weak buy signal. A weak buy signal is also generated on stochastic. RSI is also rebounding from oversold condition and trend is positive. With an upward rally in stock it is better to exit from the stock at the higher exit target of 1820.0p with a stop loss of 1710.0p
BT Group PLC
BT has rebounded from a 52-week low of 194.0p. Trend is looking positive for stock on rebound as MACD and stochastic give a weak buy signal. 14-day RSI is above 50 and trend is positive for both RSI and MACD. It is better to exit from the stock at 210.0p on any price fall to reduce losses.
