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Actually I see it totally different - gas prices higher so oil will be used more to compensate; flights opening up as shown by US decision; massive draw tonight again in US supplies (around 7m); developed countries demand increasing and the only negative is China which I expect to be centrally supported and their growth to continue. Tapering likely to be delayed in USA and with GE about to complete I see a good run for the next few weeks. If there is also a cold winter then demand will continue to rise as will demand so oil is pretty safe. Agree slight concern on the domino impact from China but Asia get things all the time- avian flu; swine flu etc which never impact the rest of the world and this won’t either. Think we are fine for a couple of months yet GLA
If Chinese demand for oil does fall, I don't that will have a major impact on the oil price other than push it back nearer to $65.
The net effect will simply be to halt the OPEC+ timetable of increasing post pandemic supply and maybe even reversing it if necessary.
It underlines just how much control OPEC+ have of the oil market without the US pushing the market into over supply.
Hopefully if this equilibrium can be maintained it will help with the transition to renewables, with the oil giants like BP making profit from oil and investing some of it into high capital spend renewables. Even Enquest could play its part in the transition if a suitable opportunity presented itself - that would get the SP moving.
I agree on commodities. I think oil and gas equities will be something of a safe haven. There is genuine gas supply shortage, and demand unlikely to take a serious hit from a downturn. Oil a little more vulnerable, but we have opec and reopening.
I think all US tech needs is a shove. Dip buyers have been far too comfortable buying half a percent dip. Let’s see if they want to catch this falling knife!
E121
Property is a massive part of China’s growth, and also a big driver of consumer confidence through the wealth effect.
Taken together with everything else that is going on I see this as a serious problem.
Gas prices driving inflation.
Fiscal tightening around the globe.
In the end all of this will impact earnings, and reduce asset prices. Potentially it will trigger a broader global recession. Markets have become complacent.
MRC - IMO, any contagion risk from China will be minimal. It's not like Western banks were financing Chinese property companies hand over fist, and that could've been a problem. Yep, their domestic economy could be hit a bit if the property market is hit more, but their export economy will still be thriving. Their banks are very well capitalised and the Capital Adequacy ratios will still be higher than the PBOC's benchmarks, even if Evergrande defaults on their debt obligations, and they'll pull through.
What this current bout of volatility will do, IMO, is to force the Fed to lay low and not bring up Taper till either later in the year or even 2022. Oil/Gas is holding up better today, but many other industrial commodities that rely on China have been decimated. Take Iron ore and that's 60% since just over a quarter or so. And so have other commodities like Copper/Aluminium and they may go down more yet if China slows down from here. Oil and Gas are more global in nature and they're not as China tied as the other industrial commodities. Net - the Fed won't be compulsed to act at this time because of what's happening now and that's supportive for O&G.
And if the US can come around to pass the spending bill, that'll be another shot in the arm for O&G prices. What this also means is that tech demise will likely be postponed for a few more months.
I doubt that the GE deal closing isn't already priced into Enquest SP at this time - it's a 'known known' and so why would the market react by pushing it up 4p on the day? IMO, that's unlikely, but stranger things have happened.
In other news, GOM production from Shell's platform will be knocked out for a few more months. That's mildly supportive.
https://www.bloomberg.com/news/articles/2021-09-20/shell-faces-extended-gulf-of-mexico-crude-output-outage-from-ida
https://www.msn.com/en-gb/money/stockdetails/analysis/fi-ao88hw?ocid=entnewsntp
38p price target in 1 yr time. dated 9th Sep 2021
The GE deal is penciled in for end of Sep.. so I expect a few to buy in now.. 23.95p eod for tomorrow.
Perhaps a 4p rise on RNS day.. which no doubt will be sold into by a few.. If it completes in the first week of Oct, then that's ok too.
They don’t want it Jan, but things could easily get out of hand.
It won’t take much to topple US tech.
I have a sinking feeling that there will be no RNS this side of the 30th September. I would love to be proved wrong but even when AB states that something should happen you know that it probably won't happen........zzzzzzzzzzzzzzzzzzzzzzz
Not sure China will want the "Evergrande" situation to run out of control ! Am expecting China to step-in with a solution in the next day or so (before Thurs). Think it will just be temp though.
Agree a pull back in US stocks and the wider World stocks is due.
Still expecting a "Sant Rally" in qtr4 and markets to hit new all time highs - The Top before the big crash comes in 2022.
Commodoties possible the best place to be moving forward.
mrc
Just keep everything crossed - with one black swan taking flight, the last thing we want is another.
Brent did very well today - normally when markets fall, it leads the way down.
Apparently only Citibank have significant exposure to Evergrande in the west but the problem is that contagion spreads - just like Covid - back to black swans again!
So far this has been a very well sign posted sell off and provided no one panics it’s what is needed. Anyway would be nice to see an RNS before month end !
I think this could be your black swan Chilting
Chinese housing bubble
E121, Chilting,
I wouldn’t count on Chinese authorities being able to contain this. Central banks and governments can only do so much. If confidence fails then it will all come down. You can see this already with housing in China.
There’s also $5 upside above the Goldman Q4 $80 target in light of extra oil usage due to high gas prices , so that supports prices for the next 6 mths, It’s not even Winter yet. ........ WTF , still no RNS .
As long as Evergrande remains a Chinese problem then we are OK, but I guess there are a lot of western investors also tied up here - maybe including some western Banks - we all know what happened in 2008.
Obviously, Evergrande is providing the impetus for the current leg lower in the markets. China won't allow it to go bust and there will be a restructuring in place and rules to reign in their (and others') excess capital spending will likely be brought in. I don't really see a negative impact of this current on oil demand in short/medium term. It'll be BAU after the current spell of volatility works its way out.
Even in the US, valuations are stretched in Tech, but not as much in the consumer discretionary sector, let alone in the oil sector. These kind of shakeouts are good for tempering overblown speculative instincts in the markets and should be welcome. If we get another 5 to 7% fall from Friday close over the coming days/weeks, that is very welcome and sets us up for a nice Q4 rally. Remember Brent $65 to $80 is the Goldilocks zone and should hold at the lower end, IMO.
If we do get a big dip it may be better to wait for the bottom and then pile in with AHT - I missed that one in March 2020 - it rebounds very quickly and has excellent broker ratings.
They will take everything down if panic sets in and we have some big drops. The real world is doing ok so I expect real world companies will be ok. Outside US valuations are sensible.
Its overbought shares that are vulnerable to a bigger dip and Enquest certainly isn't in that category.
Its probably best to do nothing anyway and just let the correction happen, then look for some buying opportunities when sentiment improves - just like Summer 2020 after the Covid markdown.
My Put options are starting to look good. Risk is piling up.
I’m holding my sipp shares…should probably sell but long term PMG and ENQ are cheap.
I have no concerns either about ENQ itself, but wider markets look well dodgy and a more serious correction looks entirely feasible. Whether that brings the ENQ SP down or not doesn't matter to me particularly as it will certainly be associated with wide ranging drops in SP's offering up good opportunities. I've closed out all ENQ positions at a profit. Maybe I'll regret it, but if this correction goes much further 'Cash will be King'. Good look to everyone.
Running through the fundamentals of enquest I for once have no major concerns. Once GE completes and if oil stays above $65 (yes $65) we will have massive fcf and with the last few months of higher POO the future is looking very bright! Once GE completes I don’t think we have any other concerns except working out when dividends will come and the sp re- rates!! Not worried about short term movements GLA
Red red red