Weekly Small Cap and IPO Wrap: Benchmark and small caps emerge 3% stronger this week thanks to some real REE GLEE

• The ASX200 & Small cap index (XEC) find 3% this week
•  Crypto got killed
•  Rare earths (REE) stocks rock

For the uninitiated, the glorious S&P/ASX Emerging Companies (XEC) is a benchmark for Australia’s micro-cap companies. It contains up to 200 stocks that ranked between 350 and 600 by float-adjusted market capitalisation at the time of their index inclusion.

It’s a brave little fish swimming in a big pond and this week I commend it again for slipping 0.3% on Friday, yet ending the week ahead by 3%.

On the other hand, the showboat S&P/ASX 200 (XJO) is Australia’s leading benchmark index. Home to the the top 200 ASX listed companies by float-adjusted market capitalisation.

By September, the asx200 accounts for 81% of Australia’s entire equity market cap.

The ASX200 found about 0.4% by 3pm and 2.8% for the week, really just reflecting the weak-ass US lead, while a decent performance for materials and the tech names really helped offset trouble in property REITS and some retailers and REITS.

Bond yields mostly fell, as did oil and metal prices but the iron ore price rose. The $A as little changed around $US0.67, with the $US up slightly.

Offshore it was the Wall Street stocks which hit retreat after their post US CPI surge. That was followed by a conga line of Fed officials reiterating there’s a bunch more to do on inflation.

This left US and Japanese shares down a bit for the week, but here at home and over in the EU and on the mainland, Chinese shares rose.

While share markets ran a bit ahead of themselves after the lower-than-expected October US CPI and we could see more volatility in the short term there has been more positive developments over the past week:

AMP Capital notes that the US producer price and import price inflation for October slowed more than expected adding to signs that we have seen peak inflation in the US.

“Our Pipeline Inflation Indicator is continuing to trend down (with falls in gas and coal prices and lower shipping rates in the last week) and points to a further fall in US inflation, ” Dr Shane Oliver said.

Takes from the crypt, crypt

What exactly went wrong at FTX crypto exchange will take a while to unpack.

Meantime, here’s some fine observations:

“Who could’ve predicted an asset with no intrinsic value would become worthless?” (New York Times Pitchbot Twitter account)

“It’s partly fraud and partly delusion” (Charlie Munger).

“I gave up after getting lost in jargon.” (Shane Oliver)

Our Badman:

‘Australia can play a big part with crypto regulations’: @DigitalXLtd experts chat with Stockhead about the FTX exchange fallout and what needs to happen next for the industry locally and globally. #crypto #FTX #regulations Stockhead > https://t.co/qqipPwjmFx pic.twitter.com/hWBKlLDohn

— Stockhead (@StockheadAU) November 18, 2022

The idea that someone can just create a coin and start trading it is, as Munger said, “crazy”.

And crypto currencies have not delivered on their claimed benefits – to be a hedge against inflation, a reliable store of value, a diversifier against other assets and to allow quick and cheap transactions.

The best things perhaps for crypto traders is to stop investing in things, where:

a) the use case is unclear and value is very hard to determine

b) the investment is so complex you can’t understand it, and;

c) where the case for it rests heavily on past performance.

ASX IPOs this week:

Nightingale Intelligent Systems (ASX:NGL)

Listed today: 12pm AEDT

IPO: $6m at $0.22

US-based NGL develops and sells commercial Unmanned Aerial Vehicles (UAVs) aka drones for security applications.

Called ‘Blackbird’, this drone can run regular patrol and manual surveillance missions, day and night.

When an alarm is triggered, the system automatically dispatches Blackbird to the alarm location which streams live video to the security team.

NGL has fought its way off the lat, but not the best start on Friday.

ASX SMALL CAP LEADERS:

Here are the best performing ASX small cap stocks for November 14 – November 18:

Swipe or scroll to reveal full table. Click headings to sort:

I don’t even know where to start… I guess the REE discovery private club…

Shares in WA1 Resources (ASX:WA1) are up again – a stonking  60% at the time of writing on news of a $10mn capital raising, fast-tracking the company’s niobium-REE discoveries in the West Arunta.

Undertaken at a price of $2 per new share and a 13% premium to the last traded price of $1.77 on November 11, the placement will result in the issue of 5m shares.

“We sincerely appreciate the support from our new and existing shareholders which is enabling us to continue to execute the exploration we’re so passionate about,” WA1 managing director Paul Savich says.

“Funds raised will primarily be applied to a substantial drilling program at our West Arunta Project which will focus on determining the depth and lateral extent of the carbonatite intrusions intersected at Luni and P2.”

The drilling will take place in 2023.

Joining the exclusive club was OD6 METALS (ASX:OD6) which Reuben observes now also has the punters are frothing over its own rare earths discovery.

OD6 is now up 100% since announcing “some of the highest grades and thickest clay-hosted rare earth intersections seen in Australia” last week.

This week we’ve been singing the praises of  new REE rocker, Victory Goldfields (ASX:1VG) which is up 40% for the week. 1VG says its ionic clay rare earths discovery at North Stanmore is “developing into a project of significant scale”.

ASX SMALL CAP LAGGARDS:

Here are the least performing ASX small cap stocks for November 14 – November 18:

Swipe or scroll to reveal full table. Click headings to sort: