There is talk of Queensland opening its borders earlier than expected. So, assuming Victoria and NSW’s borders remain open despite Omicron, we should see a faster recovery in tourism.
Queensland is expected to hit its vaccination target over the weekend and in doing so will open its borders to its fellow eastern states.
Now, we just need WA to open its borders, although that looks unlikely to occur until well into next year.
Let’s hope it happens sooner.
It’s unlikely that Queensland border opening speculation had an impact on the ASX, but the market is higher in trading today.
The S&P/ASX200 has gained 18.90 points or 0.26% to 7,244.10 so far after setting a new 20-day low.
This index has lost 0.48% for the last five days but has gained 9.97% over the last year to date.
The top-performing stocks in this index at time of writing are ALS Limited up 3.90% and Nickel Mines Limited up 2.55.
Despite border talks, Flight Centre was one of the losers in trading this morning after Regal Funds Management cofounder Phil King urged investors at the Sohn Conference in Sydney that they should sell shares in the travel company.
King believes Flight Centre rebounded too strongly since its low point in 2020 and will have to battle a greater level of online travel bookings.
TPG Telecom shares also sank, down more than 7% at the start of trading, while Newcrest Mining fell 1.9% to $22.47.
Other winners and losers include Chalice Mining 4.4% higher, ALS 3.5% higher and Sims which has gained 3.3% to $14.60.
Consumer staples were down led by supermarket giants Coles and Woolworths which both fell more than 1%.
Health stocks also declined.
Miners were generally stronger, with BHP scrapping its dual listing to focus on the ASX and gaining close to 2%. BHP will become one entity listed on the ASX in 2022.
Rio also gained 2%.
Banks and energy stocks are also currently higher.
Should crypto be banned?
According to American billionaire Charlie Munger, who is vice-chairman of Berkshire Hathaway (NYSE:BRK), cryptocurrency should be banned.
Speaking at the Sohn Conference in Sydney, Munger said “I wish they’d never been invented.
And again I admire the Chinese, I think they made the correct decision, which was to simply ban them. In my country, English-speaking civilisation has made the wrong decision, I just can’t stand participating in these insane booms, one way or another.
“It seems to be working; everybody wants to pile in, and I have a different attitude – I want to make my money by selling people things that are good for them, not things that are bad for them.
“Believe me, the people who are creating cryptocurrencies are not thinking about the customer, they’re thinking about themselves,” he says.
Munger has been vocal at the conference calling Costco (NASDAQ:NA:COST) a major threat to Amazon and calling Jeff Bezos one of the great leaders.
“Amazon may have more to fear from Costco than the reverse. I think Costco will eventually be a huge internet player. People trust it, they have enormous purchasing power to reduce prices, they’re into very efficient forms of distribution.
"Who would you like least to compete with in the world of the future? It’d be the sentence from hell if I had to compete with Costco.”
On Bezos Munger said, “He’s a very brilliant man, and he’s worked very hard and he’s somewhat fanatic and of course he’s had a remarkable result.
“And he caught a big wave on purpose, and played it harder than almost anybody else and so an interesting example of a Lollapalooza effect is Jeff Bezos. Now he wouldn’t have been so successful if there hadn’t been an internet wave for him to ride, but there was an internet wave and when he saw it, he got aboard, he threw aside everything else in his life and just headed for the top of that wave and he’s been surfing ever since.”
Backing renewable energy
Munger has also backed in renewable energy.
“I would be in favour of using a lot more renewable energy from wind and solar, even if there were no global warming problem,” Munger said.
“I think saving the hydrocarbons for future generations instead of blowing them all in one big blast, I think would be a very smart thing to do even if there were no global warming. So, I love the fact that we’re rapidly reducing the burning of coal and the burning of gasoline and diesel … and replacing them with electricity from renewable sources.
“I think that’s a smart thing for the world to be doing and it would be smart even if there were no global warming.”
The one man on China’s side
He may be one of only a few voices in praise of China, but Munger certainly backs them and he thinks Australia should repair its relationship and continue to sell it our minerals.
“I think China was right to step down so hard on corruption, I think the guy running China has done a lot right,” Munger said.
“In the history of the world, no big company has come up so fast as China. They were right to cut back on some of the exuberance that has come to the financial markets.
“I think Australia was very lucky to have China get so prosperous, so it’s been a huge blessing to Australia. I think Australia with its deep involvement in China can be in a constructive position, Australia can encourage the United States and China to be more reasonable.”
Iron ore resurgence – will BHP benefit?
As we do each week, we asked Wealth Within founder and analyst Dale Gillham for his take on a burning issue. This week it is iron ore.
“Following China’s announcement earlier this year that it would cut back steel production, the price of iron ore fell by more than 50%. As a result of the weakness in iron ore prices, BHP Group Ltd fell 34%, Rio Tinto Limited fell 36%, while Fortescue Metals was down 47% although this has now changed given that China recently announced it would ease restrictions on steel manufacturing.
“Consequently, there has been a resurgence in the price of iron ore, as it rose more than 12% over the last two weeks. BHP has also moved up over 4% this week and over 11% since early November.
"Interestingly, Fortescue Metals is only marginally up this week, however, it has risen over 24% since early November, while RIO is slightly down this week but is up over 5% since early November.
"That said, all three stocks were rising well before the news that restrictions would ease, so it shows that while we would like to think the market is efficient and everything is always known, in reality, it is not black and white.
“While it’s great news that BHP, RIO and FMG have done better over the last month and may continue to do well into 2022 if China does ease the restrictions on steel production, caution still needs to be exercised as nothing is guaranteed.
“We need to remember the world is still working out what impact the new COVID variant Omicron will have on our economies. If there are little to no mass lockdowns around the world and China does ease restrictions, then all three of these stocks will do very well in 2022.
“My pick is BHP followed by RIO although I would issue a word of caution on Fortescue Metals, as it can move fast in both directions.”
On the small cap front
West Wits Mining Ltd (ASX:WWI) is up 12.90%. WWI has an updated JORC-compliant mineral resource estimate (MRE) that expands its gold resource by 724,000 ounces to 4.28 million ounces at 4.58 g/t gold, a 20% increase.
Kazia Therapeutics Ltd (ASX:KZA, NASDAQ:KZIA) is up 3.97%. KZA has released final data from its Phase 2 clinical study of the drug paxalisib – a first-line therapy in patients with glioblastoma.