CEO Morning Brief

Poh Kong Leads Rally in Gold-linked Stocks as the Precious Metal Hits Fresh Record

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Publish date: Tue, 21 May 2024, 10:39 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (May 20): Shares in gold-related counters surged on Monday after the precious metal notched a fresh all-time high as investor demand soared across the broader metals market amid increasing optimism that the US will cut interest rates this year.

Poh Kong Holdings Bhd (KL:POHKONG) led the gainers among local gold-related counters as it jumped by as much as 12.5% to RM1.33, its highest since Aug 7, 2020. Poh Kong ended the day at RM1.29, still up 7.5%, giving it a market capitalisation of RM529.4 million. Year to date (YTD), Poh Kong has climbed 49.13%.

According to a Bloomberg report, the US dollar fell and Treasuries rallied last week after data released on Wednesday showed that inflation in April eased more than expected.

Bloomberg wrote that the development offered support for the precious metal, which doesn’t pay interest and is priced in the greenback. Precious metals are among assets that tend to benefit from haven demand, it noted.

Rakuten Trade, in a note last Friday, said Poh Kong was poised to capitalise on the recent uptick in global gold prices, further buoyed by expected increases in consumer spending.

“The roll-out of the Employees Provident Fund's (EPF) Account 3 and a 13% salary increase for public-sector employees should bolster disposable incomes,” Rakuten Trade said. The anticipated rise in disposable income could strengthen consumer purchasing power, potentially enhancing Poh Kong’s retail sales, it noted.

Other major gold-related stocks also saw notable increases.

Tomei Consolidated Bhd (KL:TOMEI) experienced a jump of 4.9%, hitting an all-time high of RM2.11, before paring a sen to close at RM2.10 — still 2.94% more than Friday's close, for a market capitalisation of RM291.1 million.

Niche Capital Emas Holdings Bhd (KL:NICE) ended the day 6.69% higher at 15.5 sen, for a market capitalisation of RM172 million.

Bahvest Resources Bhd (KL:BAHVEST) settled 1.72% higher at 59 sen, valuing the group at RM731.5 million, while Zhulian Corp Bhd (KL:ZHULIAN) rose 0.74% to close at RM1.36, bringing its market value to RM625.6 million.

YTD, Tomei has gained 69.35%, while Niche Capital has risen 14.81%. Only Zhulian slipped by 15.49% during the period.

According to Bloomberg, spot gold was up 0.9% to US$2,437.48 an ounce in early Asian trade. The Bloomberg Dollar Spot Index was flat, following a 0.7% decline last week to its weakest in more than a month. Gold earlier jumped to a record high of US$2,440.59.

Silver, palladium and platinum all climbed.

Bloomberg added that silver, otherwise, was trading near an 11-year high, after a strong rally last Friday was helped by spillover sentiment in wider physical metals markets, where tightening supply had spurred investor demand for materials like copper.

It said unlike gold, the white metal is also considered an industrial commodity, given its usage in things such as solar panels.

Source: TheEdge - 21 May 2024

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