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Beaufort Securities Breakfast Alert - Headlines South Korea bans anonymous cryptocurrency trades

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Markets

Europe
The FTSE-100 finished yesterday's session 0.20% lower at 7,751.44, whilst the FTSE AIM All-Share index was up 0.24% at 1,070.42. In continental Europe, the CAC-40 finished 0.28% higher at 5,541.99 whilst the DAX was up 0.22% at 13,463.69.

Wall Street
Last night in New York, the Dow Jones closed 142.88 points higher at 26,214.60, the S&P-500 climbed 22.67 points to reach 2,832.97 and the Nasdaq gained 71.65 points to 7,408.03.

Asia
In Asian markets this morning, the Nikkei 225 was 307.82 points higher at 24,124.15, heading into the close, and the Hang Seng was up 441.85 points at 32,835.26. 

 

Oil
In early trade today, WTI crude was 0.72% higher at $64.03 per barrel and Brent was up 0.61% at $69.45 per barrel.

 

 Headlines

South Korea bans anonymous cryptocurrency trades
South Korea is banning the use of anonymous bank accounts to make cryptocurrency transactions. The move is aimed at stopping virtual currencies being used for crimes such as money laundering. The regulations will bring the country closer into line with financial rules in other markets. South Korea is believed to be the world's third-biggest market for trades in Bitcoin and other cryptocurrencies, behind Japan and the US. And its importance in the world of digital currency has meant that decisions made in Seoul can result in large, sudden price swings. The new policy, which had been discussed for some time, will kick in on 30 January. Holders of anonymous cryptocurrency wallets must now link them to bank accounts in their own name, and have their identities confirmed. The requirements are similar to the Know Your Customer anti-crime regulations in the US. Separately, underage investors and foreigners will also be banned from opening cryptocurrency accounts in South Korea. And even stricter measures may be introduced later, with officials earlier this month saying a ban on cryptocurrency trading activities was one step being considered. On Monday, Yonhap reported that the country's cryptocurrency exchanges would be hit with hefty tax bills in a separate attempt to reign in the sector. Trading is popular among the country's younger population and demand has seen a 30% premium put on some virtual trades compared to other countries. However, volatility around prices together with the lack of regulation surrounding cryptocurrency trading has led to ongoing concerns among South Korean officials that investors are leaving themselves open to potentially huge losses.

Source: BBC News

 

Company news

 

Karelian Diamond Resources (LON:KDR)  6.75p – Speculative Buy
Karelian Diamond Resources, the diamond exploration company focused on Finland, announced encouraging results from 17 till samples taken from of the Kuhmo region of Finland. These were taken from the target around were a green diamond was discovered within a till sample as reported on 31 January 2017. Whilst all samples contained KIMs (kimberlite indicator minerals), one sample returned 98 KIMs, an exceptionally high value implying close proximity to a kimberlite source, comprising 38 peridotitic garnets (G9/G10 Cr-pyrope), nine orange mantle garnets and 40 chromite grains in the 0.25mm to 0.5mm size fraction. Moreover, 11% of the KIMs recovered from this sample were in the 0.5mm to 1.0mm size fraction. All of the peridotitic garnets of the larger size fractions had what is referred to as “partial alteration mantles”, which also implies proximity to a kimberlite source since such mantles are not well preserved if transported over large distances. On aggregate, these results suggest that the sample is either above the kimberlite source or in very close proximity to it.

Our view: We are very excited with the high number of KIMs and especially the preserved partial alteration mantles around the larger garnets which implies very close proximity to a kimberlite source. The above results combined with the previously announced discovery of a diamond within a till sample adds to the high prospectivity of the Kuhmo region. We look forward to further updates as Karelian zeros in on the kimberlite source in the region. In the meantime, we maintain a Speculative Buy on the stock.

Beaufort Securities acts as corporate broker to Karelian Diamond Resources Plc

 

Sunrise Resources (LON:SRES 0.16p – Speculative Buy

Yesterday after market opened, Sunrise published excellent independent results of a “concrete cancer” test on its pozzolan (from the CS Project). The performance demonstrates that CS pozzolan is “amongst the best natural pozzolans available on the market”. The test involved using some the most reactive aggregates in western USA and substituting 25% CS natural pozzolan for Portland cement. It resulted in a 96% decrease in expansion versus 100% Portland cement.

Our view: Concrete cancer is the Alkali-Silica-Reaction (ASR) between Portland cement and the reactive silica in aggregates. It causes the concrete to expand, lose strength and ultimately degrade. Sunrise’s CS pozzolan has already been shown to exceed the US standard (ASTM) for strength requirements, we now know it is excellent at mitigating ASR. This will help in marketing the product and achieving the correct (higher) price. We maintain our Speculative Buy recommendation.

Beaufort Securities acts as corporate broker to Sunrise Resources Plc
 

 

Diageo (LON:DGE2,614p – Buy

Diageo will report its Interim results (to end December) on 25 January. We look for revenues of £6.6bn, EBIT of £2.2bn and Adj. EPS of £0.66, with an Interim dividend of around 25p per share, representing mid/high single digit organic growth rates. At the FY-17 results last year, Diageo raised its guidance for the Operating margin to 175 bps (100 bps) for the three year period to June 2019, so we look for progress towards this target, which if achieved would represent an Operating margin of around 32%. Vodka was the only negative growth category last year, we look for an update.
Click here to see Beaufort's full research note on Diageo published yesterday

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