5 ASX Investment Ideas in a COVID-19 World

Canaccord Genuity has shared its best investment ideas for resource investors looking for opportunities during the COVID-19 pandemic. 

The world continues to face uncertainty brought by the impact of the COVID-19 pandemic, with investors trying to look for cues as to where the markets are going and how to manage their portfolios in the current economic climate.

For Greg Galton, Canaccord Genuity’s director of private wealth research, the question investors should be asking right now is not so much if a company is earning less this year, but whether the impact of the coronavirus will decrease its value moving forward.

“Ideally investors should look to own a portion of their portfolio in ‘all-weather’ businesses where the impact of economic externalities on the value of the business is minimal,” he said in a recent report. “These businesses tend to be high quality, wealth creating businesses whose value steadily increase year on year; but importantly this does not mean their earnings must rise every year.”

Canaccord believes Australia has been able to control the impact of COVID-19 effectively in its initial stages, which indicates that it might be well-equipped to handle any future developments and may be in a better position than other countries to recover from the economic crisis.

“While the federal government has offered a significant stimulus package to alleviate the strain on the domestic consumer and employment market, there remains a very high probability that Australia will experience a recession for the first time in 30 years,” Galton’s report to clients reads.

According to the firm, Australian resource stocks are better positioned now than they were heading into the financial crisis of 2007 to 2008, and should outperform on a recovery in global economic growth.

Below is a list Canaccord’s five best investment ideas for resource-focused investors looking for opportunities during the uncertainty of the COVID-19 pandemic.

These ASX ideas reflect stocks that Canaccord believes possess high-quality characteristics, are trading at a discount to the firm’s fair value estimate and are currently exhibiting positive price momentum. All stats and data included were current as of April 29, 2020.

1. BHP (ASX:BHP)

Current price: AU$31.12; year-to-date movement: -20.1 percent

Mining giant BHP extracts and processes minerals and oil and gas with a focus on Australia and the Americas. Its commodities business includes everything from copper to potash.

On April 21, the company released its operational results for the nine months ended March 31, saying it has implemented extensive measures across its operations to keep its people and communities safe from COVID-19. Among other things it has deferred non-critical activities and restricted travel.

BHP, which is still reviewing its guidance for the year, but has already warned it will be lower than the expected AU$8 billion, reported a strong financial position and said its capital and exploration expenditures are flexible at this time.

2. Alumina (ASX:AWC)

Current price: AU$1.54; year-to-date movement: -33.04 percent

Victoria-headquartered Alumina is focused on investing worldwide in bauxite mining, alumina refining and selected aluminium smelting operations through its 40 percent ownership of Alcoa World Alumina & Chemicals (AWAC), which has a production capacity of approximately 14.1 million tonnes per year.

Due to AWAC’s performance in Q1 this year, Alumina received a AU$33.8 million cash distribution, up from AU$27.6 million on the corresponding distribution for the previous quarter.

To preserve cash, Alumina will put all growth capital expenditure on hold for the remainder of 2020, reducing spending by approximately AU$30 million; it will also look to defer a similar amount of non-critical sustaining capital expenditure over the course of the year.

3. OZ Minerals (ASX:OZL)

Current price: AU$8.79; year-to-date movement: -16.92 percent

OZ Minerals is a copper-focused international company that owns and operates: the Prominent Hill copper-gold mine in South Australia; Carrapateena, an iron-oxide-copper-gold underground mine, also in South Australia; and Antasa, a small, high-quality copper-gold mine in Brazil.

In its Q1 2020 report, OZ Minerals said no material production impacts were experienced at its mine sites following the global COVID-19 outbreak, with all operations remaining on track for 2020 production guidance based on current operating conditions.

4. Iluka Resources (ASX:ILU)

Current price: AU$7.17; year-to-date movement: -22.15 percent

Focused primarily on mineral sands, Iluka’s portfolio includes: operations in Australia and Sierra Leone; projects in Australia, Sierra Leone and Sri Lanka; and a globally integrated marketing and distribution network. It also holds a royalty over iron ore produced from specific tenements of BHP’s Mining Area C.

During the current pandemic, Iluka said operational continuity has been maintained, with all mining and processing sites currently operational. In its quarterly review, Iluka also said it maintains a strong financial position, but has withdrawn its previous 2020 guidance.

5. Saracen Mineral Holdings (ASX:SAR)

Current price: AU$4.50; year-to-date movement: 33.54 percent

Australian gold miner Saracen Mineral Holdings holds interests in three mines in Western Australia: Carosue Dam, Thunderbox and 50 percent of the Super Pit.

In its quarterly review, published on April 28, the company reported record gold production of 158,132 ounces at an all-in sustaining cost (AISC) of AU$1,133 per ounce, with production for nine months to March 31 reaching 374,584 ounces at an AISC of AU$1,081 per ounce.

Don’t forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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On 2 March 2021 the Australian Taxation Office (ATO) issued Rio Tinto Limited with amended assessments related to the denial of interest deductions on an isolated borrowing used to pay an intragroup dividend in 2015. The borrowing was repaid in 2018.

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Ioneer Ltd (“ioneer" or the “Company") (ASX: INR) is pleased to announce that the Company has reached an agreement to establish a joint venture (the " Joint Venture “) with Sibanye Stillwater Limited ( “Sibanye-Stillwater" ) to develop the flagship Rhyolite Ridge Lithium-Boron Project located in Nevada, USA (the “Project" ). Under the terms of the agreement, Sibanye-Stillwater will contribute US$490 million for a 50% interest in the Joint Venture, with ioneer to maintain a 50% interest and retain operatorship. ioneer has also agreed to provide Sibanye-Stillwater with an option to participate in 50% of the North Basin 1 upon the election of Sibanye-Stillwater to contribute up to an additional US$50 million subject to certain terms and conditions.

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Gold isn't all that glitters in the land down under — silver in Australia is a major industry, and the country is home to both large and small players.

When it comes to precious metals, Australia has long punched above its weight — the nation was born riding the wave of a gold rush.

Gold isn't all that glitters through — Australia is also a major global producer of silver. It's among the 10 top producers, and was ranked seventh in 2020, with 1,300 tonnes coming from the many operational mines in the country. By comparison, the world's top producer, Mexico, produced 6,300 tonnes that same year.

Other key players in the silver market are Peru, China and Russia, which produce more silver than Australia, and the US, Argentina and Bolivia, which produce less.


Australia is sitting on quite a lot of the precious metal, with the world's second largest reserves, behind only Peru.

According to Geoscience Australia, one of the country's first mines was a silver-lead mine near Adelaide. Since then, the entire continent has been combed over with a fine-toothed comb, with deposits identified in every state and territory and active mines in every jurisdiction but one (Victoria).

Overall, Australia is well explored when it comes to silver, and since the mid-1800s it's had a constant stream of silver production. Aside from that, the country boasts metals-processing facilities in South Australia that separate the precious metal from its commonly mined counterpart metals, lead and zinc.

Silver companies in Australia

Those looking at the Australian silver market have options. There are plenty of big players with interests in Australian silver, and many smaller players for investors to consider researching too.

Most silver comes from mines dedicated to other metals — Glencore's (LSE:GLEN,OTC Pink:GLCNF) Mount Isa in Queensland produces mainly copper, zinc and lead, but silver is separated by the company's integrated processing streams. Glencore also operates the McArthur mine in the Northern Territory, which is primarily zinc, but between its copper and zinc assets, Glencore produced 7,404,000 ounces of silver in Australia in 2020 — over 200 tonnes.

Elsewhere, BHP (ASX:BHP,NYSE:BHP,LSE:BLT) produces a lot of silver as well at the Olympic Dam operation in South Australia. Perhaps best known for the production of uranium and copper, it also yields significant silver resources to the tune of 984,000 ounces in 2020 (or almost 28 tonnes).

According to Geoscience Australia data from 2016, over 20 mines in Australia produced silver in that year, while there are dozens of other resources identified in each state.

A primary producer of silver is the Cannington mine in Queensland, where South32 (ASX:S32,OTC Pink:SHTLF), a company that was spun off from BHP in 2015, mines silver and lead. Cannington is a big one, producing 11,792,000 ounces in 2020, or 334 tonnes of silver.

Tasmania boasts the Rosebery mine, which has seen 85 years of continuous operations and is currently owned by MMG (ASX:MMG,HKEX:1208). Rosebery, like all the others here, is polymetallic, and besides silver also produces copper, zinc, lead and gold. MMG also has the Dugald River mine in Queensland which also produced silver.

Getting into smaller companies, there are those like New Century Resources (ASX:NCZ) which restarted the Century mine in the Northern Territory for zinc and silver.

The future of silver in Australia

So, you get the picture — there's a lot of silver to be mined in Australia by way of mining everything else.

It's worth noting that because silver operates both as a precious and an industrial metal, and is mined most often alongside base metals, it can be pulled in many directions. However, it traditionally follows (and lags behind) its precious metal sibling, gold, making it a valuable investment commodity to keep an eye on.

Looking forward, the future of the commodity in the land down under — especially given Australia's significant reserves and operator diversity — is as bright as you'd like it, and depends on what investors are most interested in, given the by-product nature of the metal.

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

Australia took a stand against Facebook and Google earlier this year, and the move could have long-term implications for tech investors.

It was a ban that sent Australians wild and had the whole world watching.

Back in February, Facebook (NASDAQ:FB) stopped users in Australia from posting news in a week-long blackout, reacting to proposed legislation that would have forced the social media behemoth to pay publishers for content.

What prompted Facebook to "friend" Australia again, and what are the potential long-term implications of the squabble? Read on to learn what tech-focused investors in Australia should know about the situation.


Australia squares off against Facebook

On February 25 of this year, Australia's federal government passed the News Media and Digital Platforms Mandatory Bargaining Code. It was developed after extensive analysis by the Australian Competition and Consumer Commission, and is aimed at ensuring that news media businesses are fairly remunerated for their content.

It stipulates that digital platforms such as Facebook and Google (both named in the documentation) must pay news outlets whose content they feature — for example, if content is shared on Facebook or shows up in Google search results. The idea is that this will help to sustain journalism in Australia.

Unsurprisingly, Facebook and Google didn't react well to the code, which was first introduced in 2020.

Google didn't make any moves after it passed, but Facebook quickly made it impossible for Australian users to share news content, and pages for both local and international news organisations went blank — a major concern given the COVID-19 and wildfire concerns that were circulating at the time.

Australian Prime Minister Scott Morrison was scathing about Facebook's decision — which he ironically shared in a Facebook post — declaring the tech giant's actions "as arrogant as they were disappointing." He added, "These actions will only confirm the concerns that an increasing number of countries are expressing about the behaviour of BigTech companies who think they are bigger than governments and that the rules should not apply to them."

Despite strong feelings from both Australia and Facebook, the dispute was resolved fairly quickly, with the country agreeing to make four amendments to the legislation and Facebook restoring Australian's access to news.

Implications for Big Tech and news organisations

Both Australia and Facebook have claimed victory in the dispute, with a Facebook representative saying the company will be able to decide if news appears on the platform — meaning it won't automatically have to negotiate with any news businesses. Changes were also made to the arbitration process.

Tech experts have pointed out that larger news companies may ultimately benefit from the changes, but smaller ones could be pushed to the side. Major publishers that have struck agreements with tech giants, such as News Corp, Nine Entertainment (ASX:NEC,OTC Pink:NNMTF), Seven West Media (ASX:SWM) and Guardian Australia, may be able to increase their market share while smaller independent players lose out.

A business that is in full support of the laws is Microsoft (NASDAQ:MSFT). During the conflict, President Brad Smith came out loudly in favour of Australia's law, and advised that his company is willing to step up with search engine Bing should Google and/or Facebook pull out of the Australian market.

"In Australia, Prime Minister Scott Morrison has pushed forward with legislation two years in the making to redress the competitive imbalance between the tech sector and an independent press. The ideas are straightforward. Dominant tech properties like Facebook and Google will need to invest in transparency, including by explaining how they display news content," he said in a blog post.

"The United States should not object to a creative Australian proposal that strengthens democracy by requiring tech companies to support a free press. It should copy it instead."

Global reach and tech investor impact

Six months down the road from Australia's landmark legislation, it's tough to say what the long-term impact may be.

That said, market watchers do believe the country is part of a new precedent of forcing Big Tech into paying for journalism — something giants Facebook and Google are not used to.

Countries looking to pursue similar legislation include Canada, where Facebook agreed in May to pay 14 publishers to link to their articles on its COVID-19 and climate science pages, as well as other unspecified use cases. Canada is pursuing other avenues too. Meanwhile, in France, Google said it will pay publishers for news content after the country took up new EU copyright laws that make digital platforms liable for infringements.

For investors, the takeaway is perhaps that while companies like Facebook and Google may seem too big too fail, they too can fall subject to new regulations that can change how they do business. As nations around the world look to take back control from these mega companies, it's important to be aware of possible effects on their bottom lines.

Don't forget to follow @INN_Australia for real-time updates!

Securities Disclosure: I, Ronelle Richards, hold no direct investment interest in any company mentioned in this article.

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