Weekly ASX Small Cap Wrap: Even the Budget was unable to cushion the fall in ASX tech stocks

ASX 200 has finished the week around 1 per cent lower, with investors steering away from tech and growth stocks.

Seven out of the 11 sectors dropped, with Technology being the biggest drag, falling by more than 6 per cent.

Investors have mainly shunned tech and growth stocks in favour of cyclicals this week, after US CPI rose by 0.8% in April, its highest since 2009 and topping estimates.

But the health care sector was boosted by this week’s Federal Budget, with the government investing a record $503 billion over the next four years into the health of Australians.

That figure includes measures to mitigate the pandemic such as vaccine rollouts, as well as a$17.7 billion spend on aged care.

The biotech sector also scored a win, after the Budget announcement of a “patent box” – a concessional tax incentive scheme of 17 per cent aimed at the biotech sector that encourages the development of patented products here in Australia.

Meanwhile, the Commonwealth Bank (ASX:CBA) has hit its all time high on intraday today, trading as high as $97.38. The bank’s shares have risen by 3 per cent this week, in a clear indication that investors are rotating towards cyclical stocks.
 

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for May 10-14 [intraday]:

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Mindax (ASX:MDX) +3.200%

Junior explorer Mindax has experienced a fairytale comeback today, after its shares were suspended in 2019 due to exchange violations. After trading recommenced, it surged by more than 3,000% right off the bat, at one point even surpassing 6,000%.

The explorer has recently tapped investors for $2.08m through an entitlement offer while its shares were suspended. The cash will be used to fund its Mount Forrest Iron Project and Meekathara Gold Project.

Carpentaria Resources (ASX:CAP) +156%

The mineral explorer has gained since announcing on Wednesday that it has resolved a legal dispute with partner Pure Metals (PM). The disagreement was around PM’s obligations on a sale and purchase deal struck in November 2020.

The matter was resolved, and will lead to the completion of a new deal under which Carpentaria will acquire PM’s 24.149% of the Hawsons Iron Project. In return, Carpentaria will issue to PM 90.8 million Carpentaria shares.

Alligator Energy (ASX:AGE) +74%

The uranium and cobalt-nickel explorer’s share price almost doubled this week, after the company took steps to become a fully-fledged uranium producer.

This week, Alligator announced a strategic agreement with global commodities trader, Traxys.

Under the deal, Traxys will provide a full scope of work for Alligator’s uranium project, which includes marketing services on future uranium production, long term off-take contracting, and project development financing of up to $15m.

ASX SMALL CAP LOSERS

Here are the worst performing ASX small cap stocks for May 10-14 [intraday]:

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BNPL stocks were battered this week, mainly on inflation concerns and what it meant for the valuation of growth stocks like BNPL if interest rates rise.

LayBuy (ASX:LBY) dropped 20 per cent, while Splitit (ASX:SPT) fell by 16 per cent for the week.

Investors are concerned that higher rates arising from higher inflation might prompt a revaluation of high-growth and profit-less stocks downwards.