Far East Capital Newsletter
Markets still bouncing around on Coronavirus speculation
8 Feb 2020

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Markets still bouncing around on Coronavirus speculation

During the week we saw a spike of interest in stocks that have a nexus with alternative energy, with the most obvious ones being lithium producers. Whether this was just a rally in an extended bear market or whether the sentiment is really turning remains to be seen. The escalating theme right now is all about the coronavirus - not about how many are dying, but about how it will affect trade, tourism and our universities. The Chinese government announced that it is prepared to use monetary policy to cushion the impact, but this is a response that even Alan Greenspan probably wouldn’t have thought of. Will it make any difference in the short term?

Will the virus scare last for four weeks or four months? Is it just a pause with respect to global growth, with a subsequent catch up period, or is it a game changer. Is it nature’s way of addressing the elephant in the room - too many people in the world? If so is it a token gesture or the start of something serious. We will see.

An emerging sector with links to alternative energy is that of high purity alumina (HPA). The link here is the need to have HPA for separators in batteries, with the emphasis on high purity of 4 nines or better. The better the quality the less the risk of fires in the batteries.

We have prepared a brief paper on the sector in the second attachment to this Weekly so that readers can see what is available. 

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