Weekly Small Cap and IPO Wrap: Like Mentos to Coke

The S&P/ASX200 is lower after lunch on Friday, shedding 75 points or 1.0%. Tech and IT are being especially sullen, with Pendal Group and Afterpay (ASX:APT) both a real drag, down 15% and 8.6% at the time of word-making.

All three major US indexes closed lower this morning, as the Info and Tech sectors weighed. The STOXX 600 closed flat. Elsewhere, the US Dollar, crude, gold, Bitcoin all weaker, lower, sadder.

The US 10-yr Treasury yield? ~1.70%.

And thusly for the week, the Aussie top 200 index has lost 0.75% and it now skulks more than 3% below its 52-week high.

5 days in finance: What you should know

So this week US Fed Chair Jerome Powell officially named Mr Inflation a “severe threat”.

Mr Inflation was last seen Tuesday, jumping in the US by some 7 per cent, his highest rate for almost 40 years. Powell has backed Governor Lael Brainard’s comments this week of a March rates rise, saying the central bank is prepping for hikes and to pull a few plugs on the economy’s emergency support.

Omi-awe after Delta damage

At home the Omicron virus has been to the labour shortage what Mentos are to Coca-Cola.

The ABS says vacancies continue to break records through the pandemic – jumping almost 20 per cent to hit a record for the three months to November 30.

And that’s pre-Omi data from Delta, remember.

Ominous

CBA’s senior economist Belinda Allen says Omicron’s impact on the economy is still being assessed but warns, “a combination of cautious households and those undertaking isolation will put a dent in consumer spending”.

‘Cos let’s be honest here, ABS be damned, it’s been a week of tattered supply lines, shuttering stores and businesses slashing operating hours.

Ällen says brace for impact, because these snowballing staff shortages and supply constraints will have to play out somewhere in the Omicron economy.

Nickel’s new high, China’s base case

Over in nickel town prices smoked to a new decade-high on the back of surging stainless steel prices as China restocks after its big, possibly meaningless Beijing Winter Olympic build-up.

Analysts at Fitch say the Chinese government has shifted its policy focus from deleveraging and credit clean-up to stabilising growth, although the property sector will continue to be the biggest drag on growth.

Released on Friday, Fitch’s base case is for a sustained China recovery in 2022 with real GDP growth pegged at around 4.5%-5.5%.

Our base case: a scenario like that would be just fine for the Aussie miners and metals sector.

The week in IPOs

Pretty quiet so far in ’22 on the IPO front.

We did welcome Careteq Ltd (ASX:CTQ) which joined the boards Monday after raising $6m at 20c per share.

The healthtech crashed on day one and is trading on Friday about 18% lower than its IPO price.

CTQ’s core product is its SOFIHUB platform that includes fall-detection sensors which it says will assist customers to live independently.

This week also introduced investors to My Foodie Box (ASX: MBX). The Aussie meal kit business made a strong debut on Tuesday, It’s a WA-based start-up and its $6m IPO has been backed by Magnet Investments — the parent company of Australian and New Zealand Thermomix distributor, The Mix – which holds a ~15% stake following a $2m cornerstone investment.

ASX SMALL CAP WINNERS:

Here are the best performing ASX small cap stocks for January 9 – 14:

In case you missed it this week on Stockhead,

It’s been a great week for Pacgold (ASX: PGO) up some 18% following some gorgeous gold hits out of Alice Road.

Shares in the near $30m market cap stock are on their way to quadrupling since its July 2021 IPO at of 25c per share.

This week, we’re also going with a nickel miner which is pulling back today (although still up 6% over five days), because IGO (IGO:ASX) is both easy to spell and looks like a solid exemplar of how the lithium-nickel-I-didn’t-know-that-was-even-a-metal sector is performing.

IGO owns 100% of its Nova nickel-copper-cobalt mine in WA’s Fraser Range, but its initial re-orientation began in April last, when it sold its 30% stake in the Tropicana gold mine, its JV with AngloGold Ashanti in WA to Regis Resources, for well over $900 million.

The new IGO’s diversified into lithium land, buying a 25% stake in the world’s largest hard-rock lithium mine, Greenbushes mine in WA, as well as a 49% stake in a lithium hydroxide being built at Kwinana, outside of Perth, near some kind of motorway.

The one we like for its totally DC Comics feel and meteoric metrics is the semi-conducting small cap Brainchip (ASX:BRN) – up an evil 69% this week (laughs maniacally).

Stockhead’s plucky and well-meaning Deputy Editor Sam Jacobs says it best when he says nothing at all, but this is also very good – here – on Brainchip’s Friday update.