Mining stocks plunge as mining takes hit, Minergy slumps 14% lower

Once again the biggest mover for the week is a mining stock, albeit in a different direction from last week impressive start by Lucara. Coal and Energy producer Minergy, which owns the Masama coal project, slumped by 14.3% this week, to close at 90 thebe per share.

The company listed in April last year, and has not seen many sizable trades since, this low liquidity we believe adversely affected speculators who couldn’t get their money out early, leading to the drastic price movement. Botswana Diamonds also plunged 9.1% lower on Friday after trading just 220 shares valued at P44.00 to end the week at 20 thebe per share.

Minergy is developing Masama Coal Project

Sefalana has carried its bearish run into the New Year, trading 49 thebe’s lower on Monday to close the week at P9.25 per share. The stock closed last year 25% in the red, and a further 5% in the New Year. Their interim results are scheduled for release on the 26th of January, and with no trading statement released, it is reasonable to expect little change in the numbers.

It is worth noting that the slump is however not driven by poor company financial performance nor weak fundaments but rather low demand. Counter intuitively, demand for the stock slumped after it floated more shares though a rights offer late in 2016 to raise capital for its Lesotho and South African acquisitions. The low demand which is pushing prices lower, we can only ascribe to reduced international interest in local equities, compounded by heavy holdings by local pension funds of nearly 60% of the company’s stock.

Stanchart couldn’t break free of its long spiraling bearish ran as it sank further on the Friday losing 14 thebe to close the week 2.7% in the negative, at P5.00 per share. BTCL on the other hand has been trading in swings for over the week, ending it 2 thebe lower at P1.83 a share. Although the week was marred by losses there were some positive price movements, with Wilderness trading as the most upbeat stock for the week, bagging 10 thebe to end the week at an all-time high of P5.60 per share. Lucara Diamonds has had a good start to the year, up for a second consecutive week, closing the week 19 thebe higher at P19.95 extending last week’s gains, to 5% for the year. (Motswedi Securities)