ASX Today — Live ASX News | XJO Inches Higher But Markets on Tenterhooks

You likely already know that Afterpay-owner Block (ASX:SQ2) was hit last week by a short report from Hindenburg Research.

Hindenburg caused a stir earlier this year with its 100-page takedown of Indian conglomerate Adani, which wiped billions off Adani’s market value.

Now, the short-seller has big fintech Block in its sights.

Hindenburg alleges Block –formerly named Square — has exploited its customers and facilitated fraud. Additionally, Hindenburg thinks Block has ‘wildly overstated its genuine user counts and has understated its customer acquisition costs.’

Australian-grown Afterpay got an unflattering mention, too.

Hindenburg argued that Block’s acquisition of Afterpay ‘looks to be a dud’ from a financial perspective.

Citing Fitch Ratings data, Hindenburg stated that Afterpay’s delinquency rates ballooned post-acquisition.

Additionally, Afterpay’s provisions for credit losses doubled from US$109.9 million to US$203.7 million in 2022.

You don’t see this often on the ASX, either.

Small-fry fintech IOUpay (ASX:IOU) continues to release more information about a suspected ‘significant fraud’ allegedly carried out by its former chief financial officer.

Today, IOU announced that search and seizure orders were executed in Malaysia against its former CFO Kenneth Kuan Choon Hsuing and three of Mr Kuan’s associates.

A criminal investigation is already afoot but IOUpay is also launching civil proceedings in the High Court of Malaysia to ‘identify and recover assets’.

IOU also obtained a freezing order from the High Court of Malaysia, freezing Mr Kuan’s bank accounts for an undisclosed time.

IOUpay’s financial records are also currently the subject of an independent forensic audit.

And on.

✅Fraud investigation
✅Legal proceedings
✅Search and seizure orders
✅Freezing orders $IOU #IOUpay #ASX pic.twitter.com/9EvanACgNb

— Fat Tail Daily (@FatTailDaily) March 27, 2023

You don’t see this often on the ASX.

Small-cap energy company Calima Energy (ASX:CE1) has reprimanded media outlet Mergermarket for publishing ‘sensationalised statements in respect of the status of Calima’s JV discussions’ regarding the development of some of Calima’s assets.

Calima wants Mergermarket to correct the statements or retract the article altogether.

CE1 asked shareholders to ‘completely disregard the article by Mergermarket because it is factually incorrect’.

 

 

Life, in one way, is a collection of stories about the path not taken.

By choosing one job, you forsake all the potential others. It’s the same with anything. Economists call it opportunity cost.

You can apply it to your attention as well.

All we’re hearing about right now from the mainstream media is the collapse of several US banks and the plight of Credit Suisse. Now we also have Deutsche Bank in the mix too.

What nobody is focusing on is the positive changes going on for the macroeconomy.

Let’s briefly muse on the banking issue before we get there. CEO of ANZ Shayne Elliott quite rightly compares it to the ‘Savings and Loans’ crisis in the 1980s.

What he didn’t mention is that during that time, thousands of US banks failed.

The whole sorry debacle dragged on over the whole decade. The seeds of the issue were sown a decade earlier in the inflationary years of the ’70s.

Here’s my point: The US economy roared in most of the ’80s after the recession of 1981–82. So did the US stock market.

The bank troubles were ultimately a sideshow to the real action: the development and expansion of the computer industry.

The seeds of today’s banking issues were also sown in the previous decade with the absurd rates that sat so low for so long. Then came the fastest tightening ever. Something was always going to break.

While this no doubt continues to crank up volatility and worry in the short term, I don’t see it stopping the march of astonishing tech progress happening around artificial intelligence and, say, genetic engineering and treatment.

Don’t allow your focus to be misdirected away from opportunity.

Here’s the other thing about today that nobody is paying attention to…

China’s back, as far as the global economy is concerned.

Australia’s big miners are already in Beijing for their piece of the action too.

From today’s Australian Financial Review:

‘The chief executives of Australia’s three biggest mining companies have used their first visit to China in three years to praise the country’s post-pandemic recovery that will continue to drive demand for commodities as they pledged to work closely with Beijing to tackle climate change.’

That’s not all, either. China is cultivating diplomatic ties and influence across Asia through its Belt and Road Initiative to build infrastructure.

See the story here:

‘China is investing billions of dollars in trophy development projects across Asia, including Indonesia’s new capital Nusantara, as part of its campaign for greater influence in the contested region.

‘As Beijing’s Belt and Road Initiative (BRI) infrastructure funding program enters its second decade, the focus has shifted to East Asia, according to an analysis by the Green Finance & Development Centre at Fanhai International School of Finance, Fudan University, Shanghai.’

Hello! This looks very bullish for commodity prices.

And if it’s sustained, I don’t see how the mining industry can meet the demand without higher prices to incentivise further investment.

https://www.dailyreckoning.com.au/chinas-back-baby/2023/03/27/

Overheard in a conversation between traders last week:

‘Both bonds and equites are priced off of fantasies. Bonds are priced like we’re about to see a 2008 meltdown. Meanwhile equities are starting to think there’s going to be some kind of AI-driven resurgence in stock prices. Literally kindergarten level shit.’

The clearly frustrated trader was responding to the weird divergence we saw in markets last week.

As the banking panic spread to Europe, causing all sorts of volatility in bond markets, including the end of Credit Suisse, equity markets seemed to shrug it all off.

And the ‘riskier’ end did best of all.

The tech-focused Nasdaq Index finished the week UP 1.66%, continuing its steady rise through 2023 so far.

It’s up 3.76% for the month and a whopping 12.63% for the year to date, as tech tries to make a comeback from its disastrous 2022 performance.

Is this due to the stunning rise of AI (artificial intelligence) of late, as the aforementioned trader exclaimed?

Or is it something else?

While I think AI has the potential to cause massive economic disruption in the future, I don’t think it’s the reason for the current optimism in tech stocks.

In fact, I think, in a weird way, it’s directly related to the banking and bond market issues.

Markets are forward-looking, and I think some investors now think the problems in banking will result in central banks easing off on their interest rate rises.

Otherwise, we could see a contagion effect in bond markets.

It’s the old Fed ‘put’ in action — the idea that when push comes to shove, central banks will rescue the markets if things get too bad.

Indeed, despite the Fed’s insistence otherwise, markets are now pricing in interest rate cuts later this year:

When the cost of money falls, tech companies do better as the current value of their future cash flows is higher.

So, in a way, I think these seemingly contradictory signs — the fear in bond markets and the optimism in tech — kind of makes sense.

But as usual, that’s just the weight of investor opinion right now. And in these volatile markets, sentiment could change very fast either way.

Times like these can be hard for investors.

When markets move up and down fast, when policymakers seem to be losing control, and when even the cash in your bank is at risk (as depositors in the US realised this month), most people freeze and do nothing.

But that can be a mistake…

The fact is, if you’re waiting to feel comfortable again to invest, it’s more than likely you’ve missed the boat to make good returns.

So, with all that in mind, where can you look today?

Here’s a little cheat I sometimes to use to drum up new ideas…

https://www.moneymorning.com.au/20230327/what-are-insiders-buying.html

Fintech Latitude Financial (ASX:LFS) today revealed the extent of the cyber attack sustained two weeks ago.

The extent is wide.

14 million customers’ details were stolen in the attack.

Of the 14 million, 7.9 million Australian and New Zealand driver licence numbers were stolen (40% of which were provided to Latitude in the last ten years).

Latitude said a ‘further 6.1 million records dating back to at least 2005’ were also stolen. 94% of these records were provided before 2013. LFS said these records include ‘some but not all of the following personal information: name, address, telephone, date of birth.’

The fintech admitted that about 53,000 passport numbers were stolen. Latitude said it will reimburse customers who choose to replace stolen ID documentation.

The company has cyber-security insurance, and has ‘notified our insurers in respect of this incident’. But how much will the insurers cover for an attack so extensive?

The scale of the data theft is enormous.

Last year, Medibank’s heavily reported data breach affected 9.7 million customers.

Latitude’s announcement today could actually mean its data breach is bigger than Medibank’s if you add to the 7.9 million stolen driver’s licences the theft of a further 6.1 million records.

It is unclear at the moment how much overlap there is between the 7.9 million customers who had their driver’s licences stolen and the 6.1 million customers who had their personal information stolen.

$LFS Latitude Financial revealed the extent of the cyber attack it sustained on March 16th.

– 7.9 million ANZ driver's licence numbers stolen

– Further 6.1 million records, provided mostly before 2013, also stolen #ASX #ausbiz pic.twitter.com/yQEtSzv6j2

— Fat Tail Daily (@FatTailDaily) March 27, 2023

Medical software tech company ImpediMed (ASX:IPD) is up over 60% after announcing that the National Comprehensive Cancer Network (NCCN) released its updated clinical practice guidelines that include bioimpedance spectroscopy (BIS) as a screening measure.

ImpediMed has a branded bioimpedance spectroscopy device — SOZO.

ImpediMed said the NCCN guidelines “specifically name bioimpedance spectroscopy as an objective measurement tool to identify early signs of lymphoedema”.

IPD thinks the inclusion of bioimpedance in the guidelines will “help establish BIS as standard of care and accelerate adoption by Private Payors and Providers.”

Commenting on the news, IPD chief executive Richard Valencia said:

“We will take the information in these updated NCCN Guidelines and immediately integrate it into our reimbursement strategy to expand coverage of SOZO testing for lymphoedema. Our near-term focus remains leveraging our strong clinical evidence, market position, and now these guidelines to drive growth and adoption of our solution for breast cancer-related lymphoedema. Longer-term, these guidelines also support an opportunity to expand into other cancer types, broaden our footprint in oncology, and benefit even more patients.”

Junior lithium stock Lake Resources (ASX:LKE) is down 9% in early trade on Monday, hitting a new 52-week low.

Lake was one of the best performing stocks on the All Ords in 2021 and early 2022 but has fallen steadily since.

LKE is down 83% from its all-time high hit in April 2022.

Late on Friday, Lake announced that non-executive chairman Stu Crow sold a big chunk of his holding for consideration worth just under $4 million.

The lithium developer said the sale was made to ‘meet personal financial obligations’ and that Mr Crow ‘currently has no plans to sell any additional shares in the foreseeable future.’

$LKE is down 9% early on Monday.

Late last Friday, $LKE revealed the sale of shares by non-executive chairman Stu Crow. #ASX #ausbiz #lithium pic.twitter.com/ZWUQ4R8kGc

— Fat Tail Daily (@FatTailDaily) March 26, 2023