Finweek English Edition - - SIMON SAYS -

Mar­kets have gone a lit­tle crazy; we’ve seen com­mod­ity stocks do­ing dou­ble-digit per­cent­age moves down one day and be­ing up dou­ble-digit per­cent­ages the next. Peo­ple have been say­ing they’ve never seen any­thing like this, but that’s only be­cause they’re rel­a­tively new to the mar­ket. In 2008/09 we saw plenty of sim­i­lar moves, as in 2001, both times mostly in com­mod­ity stocks. This does not mean we’re back in 2008/09 and in for a mas­sive sell­off, but it does mean we have un­cer­tainty and fear around com­mod­ity stocks. Lon­min is per­haps hurt­ing the most and, with a large debt to pay off next year, it re­ally is be­tween a rock and a hard place as it’ll strug­gle to roll over or re­new the debt. A rights is­sue seems im­pos­si­ble with its mar­ket cap at around R4bn (less than the debt ex­pir­ing in 2016). Will it sur­vive? I have no idea, but un­der­stand that buy­ing the stocks is high risk and akin to putting your money on red or black at the casino; you’re ei­ther go­ing to make a lot or lose a lot and those are hor­rid odds for any in­vestor.

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