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FMG top trading volumes again

The ASX200 closed up 1% for the five days to Thursday, an impressive result as nearly half the nation’s residents are currently in some form of lockdown and a couple of rough nights on Wall Street. Rising Covid cases and the aggressive nature of the Delta strain currently spreading through Sydney and beyond have only slightly dampened investors’ spirits, as the index holds above 7300 points, however volumes remain flat and many remain on the sidelines.

Regular readers of this column would be unsurprised to learn that Fortescue Metals (FMG) has again topped the trading volumes on nabtrade, as wealthy investors and traders seek to gain incremental profits prompted by volatility in the iron ore price. They may be surprised, however, to learn that FMG did not even crack the top 10 most traded stocks for half of 2020, when investors sought to buy the very heavy dips in the travel and buy now, pay later sectors. The booming iron ore price remains the gift that keeps on giving for investors in the sector; FMG was a strong buy on Thursday, as the stock sits off its highs, but remains up 50% year on year. BHP (BHP) enjoyed a 3% bounce on Thursday after announcing a ‘greener’ nickel supply deal with Tesla; nabtrade holders took profits. Lithium producers Orocobre (ORE) and Galaxy Resources (GXY) were both up more than 9.5% on positive quarterly production numbers, and Pilbara Minerals (PLS) joined the ride, up over 10% and now up 400% over twelve months. Investors took profits across the sector in large volumes.

The gains in resources did not end with lithium. Rare earths miner Lynas Corp (LYC) announced the receipt of a Federal Government grant valued at nearly $15m to commercialise a new mineral refining process, which resulted in a 9% spike in the share price; nabtrade holders took profits. Northern Star (NST) rose 5% and announced plans to sell its Kundana assets to Evolution Mining (EVN); investors again took profits. Newcrest Mining (NCM) posted a 5% fall in quarterly production but the price was flat and nabtrade investors were net buyers.

Also experiencing price action but in the other direction was nabtrade’s second most popular trade, Zip Co (Z1P), which fell over 7% on Thursday on disappointing Q4 numbers. It is a sign of the high expectations for the company that although revenue and transaction volumes doubled, the market was less than impressed. Co-founder Peter Gray talked about the company’s plan to offer a cryptocurrency trading platform, but investors were more concerned about rising arrears and the potential for higher marketing costs with the rebranding of acquisition Quadpay. Z1P is now up just 6% year on year. Market leader Afterpay (APT) was largely unmoved, down just 0.35% on Thursday, suggesting Zip’s challenges are company- rather than sector-specific.

Three exchanged traded funds (ETFs) made the most traded stocks on Thursday – two ASX200 ETFs (VAS and STW) and GEAR, Betashares Geared Australian Equity Fund. These were all sold as investors took profits after purchases earlier in the week prompted by weak leads from Wall Street.

CSL (CSL) has popped up from $275 to over $290 over the last week and prompted profit taking from investors who were recent buyers. Formerly Australia’s largest company, CSL is down 1% over twelve months, reflecting a fall from previously high multiples, and weakness in blood collections due to the continuation of Covid 19 outbreaks in key markets, particularly the US.

For those investing directly in the US, the space race between mega billionaires Jeff Bezos (Amazon), Richard Branson (Virgin) and Elon Musk (Tesla) has not translated into share activity. Tesla (TSLA.US), consistently nabtrade’s most popular direct international stock, fell to number 15, and was actually a sell, while Amazon (AMZN.US) failed to make the top 20. Instead, movie chain AMC Entertainment (AMC.US), a recent meme stock favourite, announced the re-opening of two major cinemas and was boosted to the top of the list; some took profits while others took a punt that the cinema chain can return to its highs as Covid retreats in vaccinated areas of the US. The AMC share price is up over 1000% over six months, but down 30% over 30 days.

About the author
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Gemma Dale , nabtrade

Gemma Dale is Director of SMSF and Investor Behaviour at nabtrade. She is the host of the Your Wealth podcast, a fortnightly podcast for investors, featuring insights and updates from markets and finance experts across a range of topics. She provides regular market and finance commentary on ausbiz and in other media including AFR, the Australian, ABC and commercial tv and radio. Gemma was previously the Head of SMSF Solutions for nab, and the Head of Technical Services for MLC, where she led a team of specialists providing advice to advisers and their clients on SMSF, super, tax, social security and aged care.

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Gemma Dale

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