My favorite headline of this week: “Just Eat gains overweight rating.” Just Eat is a website for ordering carryout food recently listed in London as JE. Paul Singer of Elliott Fund, who reportedly made 369% with his decade-long hold-out on Argentine sovereign bonds is a donor to Republican candidate Marco Rubio. Global investing has impact on the US presidential race. 

The South China Morning Post (Hong Kong) reports that the People’s Bank of China, China’s central bank, cut the daily reference rate for the yuan by 105 basis points to 6.549 to the US dollar, the lowest level since early Feb. Hong Kong’s dollar is fixed to the key currency, the US$. 

China has to cut its exchange rate to preserve its export markets and discourage imports. But if it moves too publicly it will trigger renewed outflows, most in violation of exchange controls, as Chinese people struggle to more assets outside the country.

To avoid the impact on their wealth of a declining renminbi, the people’s currency, the people are also back on the market for real estate, gold, and even bricks of high-value tea.

Speaking of tea, the pound sterling and UK stocks continue to sink over fear of Brexit. Until the June vote is tallied, the fall will probably not be retraced. This is in contrast to what has happened in other currencies and equity markets since late February as stocks regained losses.

Note that our website order-taking facility is now functional for renewals and subs and remember there will be no blog tomorrow and no table update Sunday because I am spending time at a family festivity.

Heavy Industry

*Orocobre (OROCF) which mines lithium and potash at the Salar de Olaroz in Argentina, but is listed in Australia and Canada, reported an A$ loss of 28.275 mn for H1 of the 2015-6 FY, more than 14x the H1 loss in the prior year, mainly because of exchange-rate factors as the Argentine peso was overvalued. This resulted in large one-time non-cash charges to its net assets by over A$28 mn, as well as charges to income. Its loan facility with Mizuho Bank from is denominated in US$s as is its jv with Toyota Tsusha, a sub of the Japanese car-maker.

Next month ORL-Toronto (how we track it now that its US market-maker has dropped the ADR) will switch its accounting to US$s.

The initial impact of the Macri election was more negative as the Argentine peso lost another 35% year-to-date after the exchange rate was liberalized.

However, the new Buenos Aires government’s reforms should soon pay off for ORL as it can import equipment for its mines duty-free now. It now can export lithium and boron free of the Cristina Fernandez 5% export penalty and export minerals without the 10% export bite. ORL calls these policy changs material and generally positive and ending “the regulatory roadblocks which delayed commissioning of the production plant”. It has a concession to produce 17,5000 tonnes of low cost battery grade lithium carbonate with low cut-off grades.

It is a green firm as all waste will be stored in the solar brine ponds after the Li is recovered and they will be capped. So there will be no liquid discharge. There will be no impact on local water supplies. The process is much cleaner than what is being done by SQM in the Atacame desert of Chile, where halite deposits have very high surface permeability and can affect local water resources. The only energy used in Olaroz is solar energy, which also meets environmental goals.