Israel Leads Vaccinations | Lynas & EV Mania

26 January 2021

Global markets were mostly lower overnight, although the US market held up (S&P 500 index +0.3%) with Tech stocks lifting the market as investors remained optimistic at the start of a busy week of earnings from mega-cap technology companies, while economy-sensitive cyclical stocks gave back recent gains.

European equities fell despite yesterday’s positive lead from Asia. Travel and leisure suffered amid news France may go into another lockdown, the UK may tighten border controls and as Israel moved to bar foreign flights from entering the country.

Israel has reportedly vaccinated 30% of its population and showing very encouraging signs as to how COVID vaccines could be implemented globally.  A sample group of 50,777 people over the age of 60 inoculated in late Dec and then again in mid-Jan showed that two days after the second shot, the number of new infections and hospitalisations were both down ~60% from their peak. So far about 2.5m people, or more than a quarter of the population, have received a first dose, with almost a million more getting the second.  Further, of the 128k people that have been fully immunised for over a week, only 0.015% got COVID 19 the week after fully immunised – roughly indicative efficacy of 98%.

Lynas (LYC:ASX)

As we have touched on recently, shares in Lynas have gone from strength to strength after a US government funding commitment added to a runaway rally for the stock since October. The Chair of Lynas was interviewed recently about opportunities ahead for the company noting: "we are in an exciting phase of growth” and "We are in a market that's exploding".

The Biden administration victory and subsequent surprise Democrat Senate win has seen clean energy and electric vehicle related stocks surge globally as investors pile into the sector. Being a major rare earth producer, Lynas provides an attractive investment for those wanting to gain indirect exposure to the electric vehicle theme as a producer of rare-earth minerals that are vital to many critical manufacturing sectors. Production of rare-earth magnets goes inside everything from electric vehicles to wind turbines to missile-guided systems.

We have had a High-Risk Buy rating on LYC since 2018 given the risks associated with commodity pricing and the hazardous nature of mining rare earths, while remaining optimistic on the long-term market dynamics supported by the forecast growing demand for rare earths. The recent market moves have accelerated our investment thesis playing out on the stock.


Australia & New Zealand Market Movers

The Australian market closed a little higher on Monday (ASX 200 index +0.4%) in a quiet session ahead of the Australia Day public holiday.

Data showed a +16% month-on-month rise in exports and a big trade surplus for December driven by surging iron ore prices. The major mining stocks were led by Fortescue Metals which surged +4%, Rio Tinto leapt +2.1% and BHP climbed +1.1%. Fortescue’s gains following an enthusiastic reception to Friday’s trading update when the iron ore producer on Friday forecast first-half net profit of $US4 billion to $US4.1 billion when it reports on February 18.

The New Zealand market started the week on a positive note (NZX 50 index +0.5%) even as a reported covid community case in Northland is giving investors plenty to chew on.

Shares in Air New Zealand fell as the market took into account more covid uncertainty after a woman who left managed isolation on Jan. 13 tested positive. Australia has placed a minimum 72-hour halt on the green-zone travel bubble with NZ, reportedly leading Air NZ to cancel five flights, after NZ officials confirmed a case of the South African COVID-19 variant in the community. A clearer picture as to possible spread of the virus should emerge over the coming days as test results are returned.


3 Things Markets will be Watching this Week

  1. ​​​​​​​​​​The week ahead is dominated by the busiest week of earnings in the US with 122 S&P 500 companies reporting including: Apple, Microsoft, Tesla, Facebook, Visa, Samsung Electric, J&J, Mastercard, Chevron, McDonald’s and Caterpillar.
  2. Also in the US, we have the US Fed interest rate decision and release of quarterly GDP figures.
  3. In Australia, ResMed releases earnings and quarterly production reports are due from Fortescue, Oil Search, Oz Minerals, Origin Energy, Newcrest Mining and Evolution Mining.


Israel has reportedly vaccinated 30% of its population and showing very encouraging signs as to how COVID vaccines could be implemented globally.

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