Research and Publications

2020 was not only minted from an unprecedented pandemic, but also from a surprisingly fast and massive monetary response to Covid-19 from central banks and governments.

2019 had an impressive performance after a market crash during Q4 2018. Many investors missed the sharp rise in markets; in fact, the second half of 2019 triggered a fear of missing out (FOMO) market rally. In a nutshell, geopolitical tensions, especially between the US and China, triggered a global industrial recession, but central banks could rescue markets. Most of the investors were focused on geopolitical risks or the US inversed yield curve, rather than key fundamental factors of the economic cycle. We are going to analyze some facts for the next decade.

2018 can be deemed as one of the worst financial years in history. Even the stock market crash in 2008 driven by the U.S. subprime loan deficiency, which then forced the global economy to fall into a deep reces- sion, could not be comparable. While risky assets such as stocks and low-graded bonds were falling off the cliff, government bonds emerged as the last resort for investors to compensate the huge losses in stocks. In those days, a well-diversified portfolio could come away quite lightly during the 2008 disastrous stock market collapse.

As we have argued in the past, the central banks’ unorthodox and lengthy monetary policy has undeniably inflated financial assets to some extent rather than restoring the actual economy to a normalized growth rate. Accordingly, volatility in the stock markets was at a dubious low level, meaning that stocks had rallied further without experiencing a major stock market correction. The expectation that the risk of financial markets to disappoint is high, we precociously adopted a more prudent investment strategy; we reduced our risky asset exposures in favour of cash.

The global economy seemed to finally reach a more broad-based and synchronized improvement. We expect the positive trend of the world economy to remain unscathed in 2018.

Despite the optimistic perspective and that investors anticipate those conditions to continue, the risk of equity markets to disappoint is high with fears about the sustainability of high valuation.

The biggest risk out there is the interest rate risk and central banks around the world were inclined to unwind their monetary policy to normality.

Therefore, we have applied a more cautious investment strategy for 2018…

The UK’s decision to leave the European Union (EU) will likely have a limited economic impact and will constitute small contagion risks for other EU members.

Due to Brexit, safe haven trades have moved bond prices higher and yield to fresh lows; interest rates are kept artificially low longer and governments are likely to extend the lifespan of new debt issues up to 100 years. As a result of falling interest rates, stocks in general are considered to be more attractive…

Global stock markets have experienced one of the longest bull markets since the end of the housing crisis. The noteworthy trend was tightly accompanied with the unprecedented ultra-expansionary monetary policy globally.

The Fed, however, has diverged its monetary policy from the rest of the world in December 2015. Coupled with the supply-driven collapse in oil prices and the concerns about a hard landing in China, led to a sell off in the stock markets at the beginning of 2016. Investors’ sentiment remains uncertain, and so is the volatility. Until today, with the exception of the Fed, we have seen little signs of success of their policy; the outcome of negative interest rates could have even more of an adverse outcome than expected…

As explained in our market update, during the last correction we increased the equity exposure; now we are fully invested in almost all of our investment vehicles and we are going to stay invested, raising our stop loss on the various indices…

Following a strong widespread market correction and a better than expected quarterly report, we can see that the market is agreeing with our view with the stock price climbing +32% ($77.3).

After the nice run, as portfolio manager we have to rebalance our positions, therefore we are taking some profit on Maya Gold…

As a leader provider in the webpage market, WIX has one of the most important database for the traffic analytics which are very important for advertisement.

We believe the next step for a bigger player like Cisco or Google, is an acquisition of such provider, therefore we believe that the recent rumours are reliable…

As we outlined our bullish target in oil in our report of October 18, 2017, both the WTI and the Brent Crude oil prices moved up sharply and faster than our expectation.

After taking positions in oil on October 18, 2017, we have decided to sell the oil certificate with a profit of more than 10% in just one month…

On the 10th of October, OPEC Secretary General, Mohammed Barkindo, gave a clue of what the market could expect from the OPEC meeting which will be held on the 30th of November in Vienna. Suggesting that both OPEC and other oil producers, may be forced to adopt “some extraordinary measures” in 2018 in order to rebalance the market, urging also “our friends, in the shale basins of North America to take this shared responsibility with all seriousness it deserves”…

Nowadays, if a person is living in one of the most advanced countries, and is prescribed an endoscopy by their physician, the words “superbug” and “contamination” are usually not the reason to have such a visit, however, it may sadly happen that afterwards, once this person receives the diagnosis from the visit, they may become more familiar with these words.

On May 07, 2018 Canada Zinc Metals Corp announced that it has changed its name from Canada Zinc to ZincX Resources Corp and will be traded under a new stock symbol of “ZNX”. We covered the company in our “Finding hid- den gems” report the 23rd of January 2018 (trading then at C$0.34), and today we give an update following the robust positive results from the Preliminary Economic Assessment (PEA)…

As our investor community knows, we already successfully invested in lithium (over 60% profit from April to October 2017) through Orocobre Ltd (ORE AU) but we have always had on our radar screen Bacanora Minerals (BCN LN), waiting for the big capital increase for going into production…

Being zinc one of the most attractive commodities in the current economic cycle, we highlight the opportunity of investing in Canada Zinc Metals, an undervalued zinc company.

The 27th of April 2017, when it was trading at a price of $3.11, we advised our clients to buy Orocobre LTD due to the growth potential of the lithium producers in light of the growth of the electric car industry in Europe, America and especially China.

We forecasted that Chinese manufacturers would have started investing directly in lithium producers and this has just happened with a deal between Chinese car maker great Wall and Pilbara Minerals, with the acquisition of a $28 million stake in the company, which is said to be the first direct investment in a lithium supplier by an auto group…

Tesla’s story is well known to everyone, but Chinese billionaires are starting new companies in the sector, with a target of 5 Mln electric cars by 2020. To give an idea of the enormous potential in China, during 2016 in Germany 25’000 electric vehicles have been sold compared to 500’000 in China. In order to reach this impressive goal, China has to ensure any lithium production by acquairing lithium miners. Even if the sector is hot, by analysing the ETF Global X LITHIUM (LIT US), the market is not investing in pure lithium producers, therefore KTS is of the opinion that still exists certain inefficiencies in the market.