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Phone: 604.681.1568
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Archive for January, 2013

Market Commentary: The end of the TSX Venture BEAR market?

Monday, January 14th, 2013

Sunday January 13, 2013

By Ryan Fletcher

Director, Zimtu Capital Corp.

For the past year there has been no shortage of bad news in the media – from the European sovereign debt crisis, to a potential Chinese economic hard landing to the U.S. fiscal cliff (and even the potential for the end of the world with the Mayan apocalypse). Naturally, people tend to pay more attention to bad news and we perceive negative news as more important or profound than good. While there may be some credence to some of the negativity over the past year, it may be a surprise to some that global equity markets were surprising strong in 2012.

Equity markets around the globe rallied in 2012, with some of the strongest returns coming from markets in Europe; markets that were supposedly in the heart of the storm. In Germany, for example, the DAX Index returned an impressive 29.1% on the year, which was supported by mostly double digit gains across the rest of the Europe. The strongest returns in Europe, however, came from the most unlikely of places – Greece, with the ATHEX index leading Europe and jumping 33%.

It was not Europe alone that rallied. Around the globe, counter to what all of the negative media would suggest, markets rallied. In Japan, the Nikkei jumped 22.9%; in India, the BSE Sensex 30 Index popped 25.7%; and in the U.S. the Dow Jones advanced 7.3% and the Nasdaq added 15.9%.

TABLE: 2012 MARKET RETURNS

YTD 1 Mnth 3 Mnth 6 Mnth 1 Yr
North American Indices  
S&P/TSX Composite Index 4.0% 1.6% 0.9% 7.2% 4.0%
S&P/TSX Venture Composite Index -17.7% 0.0% -8.5% 2.5% -17.7%
S&P 500 Index 13.4% 0.7% -1.0% 4.7% 13.4%
Dow Jones Industrial Average 7.3% 60.0% -2.5% 1.7% 7.3%
Nasdaq Composite Index 15.9% 0.3% -3.1% 2.9% 15.9%
 
European Indices  
FTSE 100 (UK) 5.8% 0.5% 2.7% 5.9% 5.8%
CAC 40 Index (France) 15.2% 2.4% 8.5% 13.9% 15.2%
DAX Index (Germany) 29.1% 2.8% 5.5% 18.6% 29.1%
 
Asian Indices  
Nikkei 225 Index (Japan) 22.9% 10.0% 17.2% 15.4% 22.9%
Hang Seng Index (Hong Kong) 22.9% 2.8% 8.7% 16.5% 22.9%
Shanghai SE Composite Index (China) 3.2% 14.6% 8.8% 2.0% 3.2%
BSE Sensex 30 Index (India) 25.7% 0.4% 3.5% 11.5% 25.7%
S&P/ASX 200 Index (Australia) 14.6% 3.2% 6.0% 13.5% 14.6%

As at December 31, 2012 – Price Returns in Local Currency

Despite the wall of worry, commodities also fared quite well with gold up 7.1% over the year, silver increasing 9.0% and copper up 4.2%; with big percentage gains also seen in zinc, natural gas and agricultural commodities such as wheat and soybeans.

TABLE: 2012 RETURNS – COMMODITIES

As at
31-Dec-12
YTD 1 Mnth 3 Mnth 6 Mnth 1 Yr
Energy   
Crude Oil – WTI
Spot (US$/barrel)
$91.82 -7.1% 3.3% -0.4% 8.1% -7.1%
Crude Oil – Brent
Spot (US$/barrel)
$111.94 4.1% -0.1% -1.2% 15.4% 4.1%
Natural Gas –
Henry Hub Spot
(US$/MMBtu)
$3.44 15.4% -0.6% 12.4% 25.5% 15.4%
  
Precious Metals   
Gold Spot (US$/oz) $1,675.35 7.1% -2.3% -5.5% 4.9% 7.1%
Silver Spot (US$/oz) $30.35 9.0% -9.2% -12.0% 10.4% 9.0%
  
Base Metals   
Copper – LME
Spot (US$/lbs)
$3.59 4.2% -0.9% -3.7% 2.8% 4.2%
Nickel – LME
Spot (US$/lbs)
$7.71 -9.2% -3.4% -7.7% 1.8% -9.2%
Zinc – LME
Spot (US$/lbs)
$0.93 12.2% 1.0% -0.7% 9.0% 12.2%
  
Agriculture   
Corn – 1 Month
Futures
$6.98 8.0% -6.7% -7.7% 3.8% 8.0%
Wheat – 1 Month
Futures
$7.78 19.2% -7.9% -13.8% 5.3% 19.2%
Soybeans – 1
Month Futures
$14.19 18.4% -1.4% -11.4% -6.2% 18.4%

As at December 31, 2012 – Returns in US Dollars

With global equity markets booming and some commodity prices still on the rise one could have expected that the TSX Venture would have had a decent year. The exact opposite, however, was the case as fear and uncertainty gripped the market and capital fled the higher risk small cap sector. The S&P/TSX Venture Composite Index posted a decline of 17.7% on the year and many companies struggled to raise capital to continue their exploration programs or were forced to complete excessively dilutive financings.

Success in investing on the TSX Venture requires a unique combination of hard work, experience, smarts, timing and the ability to work contra the herd. As investors, typically we pay more attention to, and give more credence to bad news, perhaps because we’re wired that way.

2012 was not a bad year for global equities. This may be a surprise to some, given the barrage of bad news we have been fed over the last year. Small cap markets typically follow the large and mid-cap markets and the performance of the major global large cap indices in 2012 is positive moving forward for the small caps. There are many companies on the TSX Venture that are trading at levels not seen since the height of the fear and panic of the 2008 financial crisis. Those willing to walk contra the herd may see the opportunity.

Ryan Fletcher
Director
Zimtu Capital Corp.
Suite 1450 – 789 W Pender St .
Vancouver , BC V6C 1H2
Tel: 604.681.1568
TF: 1.877.377.6222
Cell: 604.999.5603
Fax: 604.681.8240
http://www.zimtu.com

Zimtu Capital Helps AME BC Celebrate 100 Years

Wednesday, January 2nd, 2013

Zimtu Capital Corp. is an active supporter of the Association for Mineral Exploration British Columbia (AME BC). Recently the organization celebrated its 100th anniversary. To mark the milestone, the folks at Visual Capitalist put together this infographic which looks at how the industry has evolved in the province over the last century. We hope you enjoy.

For those unfamiliar, AME BC is the predominant voice for mineral exploration and development in British Columbia and represents thousands of members including geoscientists, prospectors, engineers, entrepreneurs, and exploration companies. Each year, amongst other activities the organization hosts Roundup – one of the industry’s premier technical conferences. Last year Roundup attracted 8,320 participants from 38 countries. For those planning to be in Vancouver in late January details on the 2013 conference can be found here: Roundup January 28-31. 2013.

Also for those interested in more history on the organization and the work it does for our industry here is a video commemorating the 100th anniversary:

AME BC 100 Years Celebration Video

Sincerely,

Ryan Fletcher
Director
Zimtu Capital Corp.
Suite 1450 – 789 W Pender St .
Vancouver , BC V6C 1H2
Tel: 604.681.1568
TF: 1.877.377.6222
Cell: 604.999.5603
Fax: 604.681.8240
http://www.zimtu.com


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