With a strong reputation for being a solid operator, Gold Fields clearly got itchy and decided that conquering the world would be a good idea. Chris Griffith is a respected executive and knows what he is doing , but the market response to the Yamana Gold acquisition announcement can’t be ignored. The share price tanked 11% in the morning as South Africans digested the news and eventually closed over 20% lower once the Americans had gotten to grips with it.
Numbers aside, there was a nugget in the announcement that I found interesting for its far-reaching implications. Pepkor noted that although supply chain uncertainties persist, shipping costs have “stabilised and may trend downwards” — this is huge news for inflation if true. Cash flow from operations is what pays for capital expenditure and all-important dividends, so any release of pressure in supply chains is bullish for most equities and bearish for those in the logistics sector.Linked to the supply chain point is the pressure on corporate balance sheets, which I thought may be a driver of loans and advances for banks. Based on an update from Nedbank for the four months ended April 2022, that may not be the case.
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