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ASX trades up at lunch … and are countries moving back to coal?

Published: 12:58 19 Oct 2021 AEDT

ASX trades up at lunch … and are countries moving back to coal?

The ASX defied projections that it would open lower this morning. Well sort, of. It did open lower, down 0.1% as banks and miners fell, but was quickly back up 0.3%.

By midday, the S&P/ASX200 had gained 19.10 points or 0.26% to 7,400.20.

Over the last five days, the index has gained 1.64% and is currently 3.05% off its 52-week high.

The top-performing stocks at time of writing were Uniti Group Limited up 3.83% and Zip Co Limited up 3.11%.

Here’s a look at the fallers and gainers:

Energy issues

With the Liberal/National coalition attempting to come to terms with a workable net-zero carbon policy to take to Glasgow, broader energy issues are having major impacts on global economies.

Energy shortages and supply chain issues played havoc with Chinese GDP. China’s GDP report yesterday showed growth in the economy slowed during the September quarter.

The problems in China are far-reaching and are putting upward pressure on inflation, seen by investors as a risk leading to central banks tightening their monetary policy settings.

In the US, the clean energy revolution could take a hit, with the country increasing the use of coal in order to generate electricity. It is the first time since 2014, the US has made this move.

The UK is also restarting coal-fired power stations due to the elevated cost of natural gas and low output from wind farms.

What does this mean? Is talk of being net-zero by 2050 all bluff?

It is unlikely that is the case and even our politicians will come to some sort of agreement, but it does highlight the difficulty in the transition to clean energy facilities especially when you see stories exposing the myth of how clean electric vehicles are.

This opinion piece by Jurica Dujmovic for MarketWatch suggests, “Although EVs do not release carbon dioxide during their use, their production exerts the same toll on the environment as that of conventional cars, while the recycling of lithium-ion batteries poses unique challenges.

“Lithium-ion batteries are bulkier and take more space than their traditional counterpart, lead-acid batteries. To make matters worse, they’re highly flammable and even explosive if dismantled incorrectly.”

PayPal (NASDAQ:PYPL) eyes retail investment market

PayPal is looking to make a move into the growing retail investment market, which saw 10 million new investors in the first half of 2021, but is it the right move for the payment giant?

According to Freedom Finance Europe head of Investment Research, Maxim Manturov, this move could be successful, but will no doubt attract regulatory scrutiny from the SEC and have flow-on effects.

“The US Securities and Exchange Commission (SEC) has expressed concern about the growing popularity of securities markets accompanying the explosion in retail investing via applications,” Manturov said.

“These reservations could slow the approval process if PayPal decides to partner with an existing brokerage firm. Meanwhile, SEC chairman Gary Gensler has stated that his agency is considering a ban on payment for order flow (PFOF), which is the primary source of revenue for Robinhood and many of its competitors. PFOF enables these brokers to eliminate visible transaction fees, which they use as their key marketing tool.”

Of course, PayPal’s primary business is still going strong, with record payments last year and other growth accelerators in the pipeline.

“Total PayPal or TPV payments increased by roughly a third on an annual basis in 2020. PayPal's net payments in the second quarter of 2021 were almost $311 billion, up 41% year over year, thanks to more than 3.74 billion transactions processed during that time, Manturov said.

"Based on these figures, PayPal shows no signs of slowing down as a result of the post-COVID-19 economy. The payment processor anticipates an increase in active users of approximately 50 million in 2021 and annual revenue of approximately US$25.5 billion, which is significantly higher than the US$21.4 billion estimated by analysts. When the pandemic hit, isolated consumers had no choice but to shop online.”

Essentially, a move into retail investment could bring extra scrutiny, but shouldn’t hurt PayPal’s underlying business, particularly in a post-pandemic world.

“Today, the vast majority of consumers say that even after the pandemic, they will continue to shop online because it is more convenient, easier and saves time. It is also worth noting that the acquisition of Paidly, a 'Buy Now, Pay Later' (BNPL) platform is a reliable strategic step,” Manturov said.

“BNPL is important both as a convenient payment method and a steppingstone to developing a bilateral payment platform. PayPal is also expanding its presence in Europe in two ways.

“Its business debit partnership with Mastercard (NYSE:MA) has expanded to four more European countries: Belgium, Finland, the Netherlands, and Portugal, and Euronet Worldwide epay will use the PayPal QR code as a selling solution at its points of sale.

"The PayPal Business Debit Mastercard, introduced in the United States in 2003, is now available in 11 European countries. According to the company, PayPal business customers can now spend money in their PayPal accounts at over 52 million Mastercard locations worldwide. These criteria indicate that if it enters the retail investment market, it will be rewarded with a more extensive user base.”

PayPal looks to be in good shape.

On the small cap front

Lithium Australia NL (ASX:LIT, OTC:LMMFF) is up 8.70% after its 100%-owned subsidiary VSPC Ltd achieved an Australian first by producing commercial-quality lithium titanium oxide (LTO), an anode material required for high-performance lithium-ion battery (LIB) cells.

Okapi Resources Ltd (ASX:OKR) is up 8.04% at time of writing. Its maiden JORC 2012 mineral resource for the Tallahassee Uranium Project in Colorado, US, has been estimated at 25.4 million tonnes at 490 parts per million (ppm) uranium oxide for 27.6 million pounds of uranium oxide using a 250 ppm cut-off grade.

Predictive Discovery Ltd (ASX:PDI) is up 5.41% on the back of more strong gold assays from another four diamond drill holes executed at its Bankan Gold Project in Guinea.

Antipa Minerals Ltd (ASX:AZY) is up 2% at time of writing, having discovered multiple zones of new gold-copper mineralisation as part of greenfield exploration at Minyari Dome Project in the Paterson Province of Western Australia.

Predictive Discovery turns a new page in Bankan gold story

Predictive Discovery Ltd (ASX:PDI, OTC:PDIYF) managing director Andrew Pardey joins Proactive’s Tom Warner to discuss a ramp up in exploration across the Bankan Gold Project in Guinea. Work continues at Predictive’s flagship NEB and BC deposits, but the explorer is also interested in regional...

on 12/4/23