Possibly steeling myself

Readers may have picked up that I’m favouring the equity of cyclicals, industrials and businesses which are ‘asset-heavy’.

Steel is one of them….I’m conscious that I’m possibly late to the party (I didn’t see this move coming) as you can see (in the chart below) by the mesmerising quadrupling of the price in Hot Rolled Coil (HRC) Steel.

When I overlay a stock such as Hong Kong listed, Angang Steel, which is traditionally well correlated to the HRC price, it’s recent divergence from this ‘marriage’ is making me think if there is an investing opportunity…..but I haven’t got an opinion yet.

More work needs to be done but just sharing what is crossing my mind.

July 22, 2021

by Rob Zdravevski

rob@karriasset.com.au