Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in Kazakhmys (LSE: KAZ) — the London-listed miner focused on copper production — jumped by 25% to 221p in early trading this morning, making it easily the biggest riser in the FTSE 250.
So what: The Kazakh central bank announced today that it will allow the country’s currency, the Tenge, to devalue by around 19%. For Kazakhmys, which has around 75% of costs in the country, this has come as welcome news. For an expensive, labour-heavy workforce, the short-term benefits will be significant.
Now what: The company is presently focusing on developing two copper projects, Bozshakol and Aktogay, with the aim being to turn into a lower cost producer that gets the bulk of its production from open-pit mines.
Analysts are still expecting the company to report a loss — £38m this year, and £70m the year after — so as far as a turnaround goes, we’re only looking at those losses being reduced.
In addition, the last time there was a currency devaluation in 2009, the result was a sharp 50% hike in inflation over the following nine months. Over the medium-term any initial benefit should be eroded.