One of the criticisms of18 Aug 2018 11:40
Western capitalism, particularly as it is practised in the City of London, is that it is too short-termist with an emphasis on immediate measurable results. To some extent this reflects the consumerist instant gratification culture which developed from the 80s onwards (although some see its roots in the hippy culture of the 60s).
One of the advantages of companies with an effective domination by a few key shareholders is that they can afford to ignore this culture, provided they are not looking to raise money through a rights issue. There are of course also serious disadvantages to the PI invested in such a company.
Once you are very rich, getting more money is not about what you can spend, it is about gaining power and status. While waiting for the Russian project to come about, major shareholders in KAZ will not be inconvenienced by a lack of ready cash. The project meets their objectives. They are prioritising long term growth over short term dividends.
The market can think what it likes about this, and clearly has said during this last week that it doesn't like it. This dislike is not about the long term value of the company. It is about going back to a situation, last experienced all too recently by this company with the new mines in Kazakhstan, of a new project involving heavy debt and an uncertain future. This means the bean counters can no longer work out on their abacuses what the likely profit will be and when the dividends will come.
As a result the broker's new targets are arrant nonsense. They purport to reflect changed forecasts, but they are nothing of the sort. They are the squeal of fear of the instant gratification investment community to a genuine capitalist venture with all the uncertainty and bravery that venture entails. There is no calculated value to KAZ by brokers in these circumstances. They are ******g in the wind.
These kinds of ventures no longer exist in the UK economy which is why we are in decline. For instance, the SXX mine has had to be effectively bankrolled by the Aussies. Our modern effete capitalism is doomed to take over from abroad.
As to the consequences of this diatribe for PI investment in KAZ, I suggest you throw out the charts and be prepared for further reductions in value. There may be a bounce back next week, but the institutional investors will want out and have probably been working towards that end recently.
Of course I may be wrong, and will be happy for you to tell me that in the next few months. I will also tell you if I decide to buy at any stage.
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