We review the week that was, from bitcoin reaching all-time highs, to gold breaking out amid inflation fears.
Let’s start with reviewing the local ASX news.
SYD share price — agrees to $23.6 billion buyout
Just as Australia reached its goal to vaccinate 80% of those 16 years and over, Australia’s largest airport dropped a bombshell.
Sydney Airport [ASX:SYD] agreed to a takeover bid worth $23.6 billion.
A consortium, comprising several Australian and international investment funds, was finally successful in clinching the approval of SYD’s board following earlier rejected offers.
Under the deal, SYD shareholders will receive $8.75 cash per stapled security.
But there will be regulatory scrutiny ahead.
As we covered last week, the bid must now be approved by heavy hitters the Australian Competition and Consumer Commission (ACCC) and Australia’s Foreign Investment Review Board (FIRB).
The consortium seeking to acquire SYD must also obtain a merger clearance from the European Union.
But it’s the involvement of the ACCC that will be the most interesting to follow, as there are concerns revolving around one of the consortium’s members — IFM.
IFM already owns a 25% interest in Melbourne Airport and a 20% stake in Brisbane Airport.
Under airport ownership rules, it cannot own more than 15% of SYD if its other holdings remain.
As The Australian reported last month, sources close to IFM say it will be able to get around the restrictions by owning the airport in conjunction with its consortium partners.
Time will tell whether the ACCC accepts this position.
Vulcan share price: short seller saga continues
Vulcan Energy Resources Ltd [ASX:VUL] — one of the best-performing ASX stocks this year, having gained 525% in the last 12 months — brought its war of words with short seller J Capital to the courts.
As we covered last week, short seller research firm J Capital released a critical report on Vulcan, claiming the lithium stock was overselling its project’s potential and commercial viability.
After releasing a detailed rejoinder last month, VUL took it one step further this week and engaged the courts.
On Monday, Federal Court Justice Katrina Banks-Smith ordered J Capital to temporarily refrain from sharing or republishing its report on Vulcan.
VUL is yet to publicly comment on its legal proceedings against J Capital, so investors will likely have to wait at least until next week for more details to filter through the court system.
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Bitcoin reaches all-time highs
Bitcoin’s resurgence of late continued this week, with the cryptocurrency hitting another record high yesterday as it edges toward breaching US$69,000.
Bitcoin rose as high as US$68,991 on Thursday, topping the previous record high set only a few days earlier.
The positive momentum wasn’t exclusive to bitcoin.
Other coins rose, too, with the Bloomberg Galaxy Crypto Index — which tracks major cryptocurrencies like Ethereum, Litecoin, and Bitcoin Cash — reaching its highest level since May.
Bitcoin’s march to new peaks has saturated media coverage.
No longer is the original cryptocurrency a fringe curiosity, but an investment asset the mainstream financial community is embracing.
The mainstreaming of bitcoin was furthered when thousands of local investors gained exposure to the crypto market via the historic $40 million float of the ASX-listed Crypto Innovators ETF.
But the launch of the local Crypto Innovators ETF was not the only historic moment in crypto’s move to the mainstream.
As we covered last week, Australia’s largest bank Commonwealth Bank of Australia [ASX:CBA] will become the first Aussie bank to offer its 6.5 million users the ability to buy, sell, and hold crypto assets via the CommBank app.
All eyes on gold following US inflation data
Latest consumer price index data out of the US this week makes for some discomforting reading.
The data shows prices in the US are rising at their highest rate in three decades.
Yields on two-year Treasury notes, highly sensitive to interest rate expectations, rose by the most since March 2020.
Worries about out-of-control inflation are affecting gold.
Late Wednesday, gold broke out of a 15-month downtrend as the spot price inches higher once more.
The break out followed our own Murray Dawes anticipating a gold price spike in the next month or so.
To read more of his thesis on gold, check out his latest article.
Now, if gold does begin an upward march, eyes will turn to potential gold stock plays on the ASX.
For more information on gold stocks, we have an upcoming ‘Gold Digger’ summit with our gold guru Brian Chu.
He’ll discuss how to use the ‘natural leverage’ of gold mining stocks.
It’s a free event, so be sure to check it out.
For Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here