It’s been a pretty bleak day for most ASX shares so far this Monday. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) has lost 0.71% and is now back in the low 6,400s. But no one seems to have told the BrainChip Holdings Ltd (ASX: BRN) share price.

Brainchip shares are having a fairly wild day today. The company is presently flat at 90.5 cents a share, right on where it closed at last week. But at market open this morning, Brainship shares spiked dramatically. This artificial intelligence (AI) company jumped to 96 cents a share soon after trading commenced today.

At the time, that was a rise of 6.67%.

So what’s going on with this ASX tech share today?

Why is the Brainchip share price going haywire today?

Well, we can’t be too certain. Brainchip hasn’t come out with any ASX announcements itself but today is a rather big day for Brainchip. It’s the day that the company has officially joined the S&P/ASX 200 Index (ASX: XJO).

The ASX 200 is the flagship index of ASX shares. It tracks the 200 or so largest companies on our share market, ordered and weighted by market capitalisation. Since the values of ASX shares change every day, the index’s provider rebalances the index every three months to ensure that the ASX 200 always reflects the largest companies at the time.

As it happens, Brainchip has made the cut for the first time, helped no doubt by the company’s meteoric near-70% rise in value over the past 12 months. The results of the latest quarterly ASX 200 rebalance were announced back on 3 June and take effect from today.

This saw Brainchip included in the ASX 200, alongside other shares like Core Lithium Ltd (ASX: CXO) and New Hope Corporation Limited (ASX: NHC). They take the place of other ASX shares like Appen Ltd (ASX: APX) and Codan Limited (ASX: CDA), which have now been kicked out of the ASX 200.

ASX 200 inclusion (and exclusion) can have a meaningful impact on a company’s share price. It moves a share towards the centre of the ASX investing universe, and also potentially enables additional investment from fund managers and index funds.

So it’s possible that the gyrations we’ve seen in the Brainchip share price today could be the result of this rebalancing taking effect.

The post Why did the BrainChip share price spike 7% this morning? appeared first on The Motley Fool Australia.

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More reading

• What’s with the Core Lithium share price on Monday?
• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Transurban share price jumps as dividends hit pre-pandemic highs
• 5 things to watch on the ASX 200 on Monday
• Have ASX 200 shares bottomed? Experts weigh in

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kogan.com Ltd (ASX: KGN) share price is lifting higher today after last week’s disastrous performance.

And while there’s been no news from the company to explain today’s gains, there are a number of happenings that might have influenced it.

At the time of writing, the Kogan share price is $2.97, 6.07% higher than its previous close.

For context, the broader market is struggling on Monday. The S&P/ASX 200 Index (ASX: XJO) is down 0.67% while the All Ordinaries Index (ASX: XAO) has slipped 0.85%.

Let’s take a closer look at what might be going on with the Kogan share price today.

What’s going on with the Kogan share price?

Kogan’s stock appears to be recovering from last week’s 13% tumble despite the company’s silence.

Kogan’s stock hit a nearly four-year low on Friday when it slumped to $2.77 a share. Thus, today’s boost might be a reaction to last week’s selloff.

Interestingly, however, the latest data has placed the online retailer’s stock among the most shorted on the ASX. The company has a short interest of 9% – making it the seventh most shorted stock on the Aussie market.

Today’s gains might also come on the back of a broader boost experienced by many consumer discretionary shares.

At the time of writing, the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) is up 1.96%, making it the ASX 200’s second-best performing sector behind the S&P/ASX 200 Real Estate Index (ASX: XRE).

The Kogan share price is joined in the green by those of fellow retailers City Chic Collective Ltd (ASX: CCX), Accent Group Limited (ASX: AX1), and Adairs Ltd (ASX: ADH).

That’s despite Deloitte predicting consumer spending will slow in the second half of 2022 amid rising costs, as reported by The Australian.

Sadly, today’s lift hasn’t been enough to boost the Kogan share price into the long-term green.

The stock is currently 66% lower than it was at the start of 2022. It has also slipped nearly 73% since this time last year.

The post Why is the Kogan share price soaring 6% on Monday? appeared first on The Motley Fool Australia.

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More reading

• These are the 10 most shorted ASX shares
• Why the Adore Beauty share price is jumping but Kogan is falling
• This top broker thinks the Kogan share price has 35% upside
• These are the 10 most shorted ASX shares
• Stocked up: Kogan shares are not alone in their inventory woes

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO and Kogan.com ltd. The Motley Fool Australia has positions in and has recommended ADAIRS FPO and Kogan.com ltd. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s been a fairly disappointing start to the trading week for the S&P/ASX 200 Index (ASX: XJO). So far this Monday, the ASX 200 has lost another 0.7% and is now approaching 6,400 points. But it’s been a far worse day for the ASX 200’s largest share by market capitalisation – BHP Group Ltd (ASX: BHP).

The BHP share price has been slammed today. The mining giant is currently down by a nasty 4.82% at $40.47 a share. This latest move means BHP is now down by almost 7% over the past five trading days alone. Its losses over the past month are now stretching close to 15%.

So what’s going on with BHP today to elicit such a loss?

Why is the BHP share price copping a 5% drop today?

Well, it’s not exactly clear. We did hear news last Friday that the company has changed its mind and now wants to keep its Mt Arthur coal mine. But this is unlikely to be meaningfully impacting BHP shares today.

So the most likely culprit is the iron ore price. Iron ore forms the crown jewel of BHP’s mineral production. The company has benefitted enormously from high iron ore prices over the past few years. These have enabled BHP to fund record dividend payments.

But according to reporting in the Australian Financial Review (AFR) today, iron ore futures have just taken a dive. The paper reports that iron ore futures are currently down 9.1% in China, “as concerns mounted about an economic slowdown and the impact it will have on steel demand”.

This would explain why BHP’s fellow ASX 200 iron ore miners are also bleeding heavily today. Rio Tinto Limited (ASX: RIO) shares are also down around 5% to just over $101. Fortescue Metals Group Limited (ASX: FMG) has copped an even worse beating. Fortescue shares are down a nasty 7.3% to $17.23 at the time of writing.

So it’s likely to be fears over the price of iron ore that is hurting the BHP share price so dramatically today.

At the current BHP share price, this ASX 200 mining giant has a market capitalisation of $204.7 billion, with a trailing dividend yield of 11.86%.

The post Why is the BHP share price crashing 5% today? appeared first on The Motley Fool Australia.

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More reading

• Why are ASX 200 iron ore shares getting hammered on Monday?
• Own BHP shares? Here’s why the miner could be set for a $1.85 billion boost
• BHP share price ends Friday’s session 8% lower for the week
• Brokers name 3 ASX shares to buy today
• ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) iron ore shares are taking a beating today.

The benchmark index is back in the red today, down 0.7% in lunchtime trading. But the ASX 200 iron ore shares are doing it much tougher.

At the time of writing, the BHP Group Ltd (ASX: BHP) share price is down 4.66%; the Rio Tinto Ltd (ASX: RIO) share price is down 4.82%; and shares in Fortescue Metals Group Ltd (ASX: FMG) have tumbled 7%.

So, what’s going on?

China’s economy could be slowing

China, as you likely know, is the world’s biggest importer of iron ore which is used in its massive steel industry. The Middle Kingdom imports some one billion tonnes of the commodity each year. That represents approximately 70% of the total global annual purchased iron ore production.

Of course, if the pace of China’s economic growth slows, its demand for steel to construct new buildings and infrastructure will fall. And along with that, its demand for iron ore.

As analysts become increasingly bearish on the outlook for Chinese GDP growth, iron ore futures have nosedived, falling 9.1%.

And that decline is throwing up some strong headwinds for ASX 200 iron ore shares today.

How have these ASX 200 iron ore shares performed in 2022?

Although one of the three ASX 200 iron ore miners is in the red for the 2022 calendar year, all of them still beat the benchmark returns. And that’s without including their lucrative dividends.

Year-to-date, the ASX 200 is down 15.6%.

Over that same period, Fortescue shares are down 10%; the Rio Tinto share price is 1.5% higher; while BHP shares are up a healthy 9.4% so far in 2022.

The post Why are ASX 200 iron ore shares getting hammered on Monday? appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price plunges 7%, but here’s why Twiggy’s not worried about a Chinese iron ore cartel
• Own BHP shares? Here’s why the miner could be set for a $1.85 billion boost
• The lithium and iron ore ASX shares that I like right now: expert
• BHP share price ends Friday’s session 8% lower for the week
• Fortescue share price sinks 5% as iron ore price slides

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The painful market sell-off could play into the hands of would-be bidders with an expert pointing to two ASX 200 infrastructure shares likely to be in play.

Sarah Shaw from 4D Infrastructure thinks the APA Group (ASX: APA) share price and Transurban Group (ASX: TCL) share price make enticing targets amid the current volatility, reported the Australian Financial Review.

Why ASX 200 infrastructure shares make good M&A targets

Infrastructure shares are hotly sort after. They not only provide more stable earnings in an uncertain world, but they also provide an inflation hedge.

Shaw explained:

I really think we’ll have very, very little left in Australia in a couple of years, I wouldn’t take Transurban off the table, clearly APA – I think they are ripe for takeout.

It is easy to come in and take something out where there is no government shareholder or blocking shareholder … anything that does have an open registry is open game.”

ASX 200 infrastructure shares are an endangered species

As it stands, we don’t have many listed infrastructure shares left on the S&P/ASX 200 Index (ASX: XJO).

In the past five years, there has been $154 billion of Australian infrastructure changing hands. That’s according to the AFR quoting Dealogic data.

These include Sydney Airport, AusNet Services, Spark Infrastructure, Tilt Renewables and Infigen Energy.

ASX telecom shares like Vocus Group and TPG Telecom have also been targeted. Bidders are hungry for assets that generate relatively reliable and consistent returns.

The next takeover bid in the sector

There are only three listed infrastructure shares left on the ASX. Besides gas pipline operator APA and toll road owner Transurban, there is the Atlas Arteria Group (ASX: ALX) share price.

But Atlas Arteria’s days on the ASX could be numbered. IFM Investors bought a 15% stake in it this month. The global investor said it was mulling a full $7.8 million takeover bid for the toll road operator.

Barbarians at the gate

One might not think it, but Australia has an open border approach when it comes to foreign ownership of our infrastructure assets. This makes it easy for local and international bidders to acquire our port, rail, road and power assets.

The high volatility in our market could make it easier for takeovers to occur too. Not only are share prices in general under pressure, making assets cheaper to buy, but risk wary shareholders could be more inclined to sell.

There is certainly no shortage of firepower from bidders either. The AFR reported that there was US$304 billion in capital hunting for infrastructure assets at the end of 2021. That’s double the amount from five years ago, according to data group Preqin.

The Transurban share price has fallen around 5% over the past year, while the APA share price has gained 19%.

The post 2 ASX 200 infrastructure shares ‘ripe for takeout’: expert appeared first on The Motley Fool Australia.

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More reading

• Transurban share price jumps as dividends hit pre-pandemic highs
• Transurban shares poised for rapid dividend recovery: expert
• Tolls and phones: Wilsons unveils 3 ASX shares to buy for a slowing economy
• Will June be a good month for the Transurban share price?
• Transurban share price hit by broker downgrade

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is again giving us a shaky start to the trading week so far this Monday. At the time of writing, the ASX 200 has slipped by 1.05% and is now at just over 6,400 points. But it’s going even worse today for the Core Lithium Ltd (ASX: CXO) share price.

Core Lithium shares have lost a nasty 6.03% so far today and are now priced at $1.09 a share.

This decisive move downwards might be even more disappointing than normal today. That’s because it’s a rather big day for Core Lithium shares. This ASX lithium stock is now a card-carrying member of the ASX 200 Index.

ASX 200 Index rebalance takes effect

Yes, before today, Core Lithium did not make the cut of the ASX 200 – the flagship index of the ASX that tracks its 200 or so largest shares. Core Lithium was a part of the All Ordinaries Index (ASX: XAO), but now joins the ASX 200 as well.

Every three months, the index provider that runs the ASX 200 (and the All Ords), S&P Global, conducts a rebalancing of these indexes. Both the All Ords and the ASX 200 are market capitalisation-weighted indexes. That means they are organised based on market capitalisation. This, of course, changes every day. To reflect these changes over time, the indexes are rebalanced every quarter.

The changes that take place today were first announced back on 3 June.

So in Core Lithium’s case, we can probably put its new position in the ASX 200 down to the company’s impressive 78% or so rise in 2022 thus far.

When a share joins the ASX 200, it is normally good news for its share price. That is because it catapults a company’s shares towards the mainstream centre of the ASX investing world. Additionally, many ASX fund managers have mandates that dictate they must only choose from ASX 200 shares.

There might also be additional buying pressure from ASX 200 index funds and exchange-traded funds (ETFs). These investment products have to track the ASX 200 exactly. So any share that joins the ASX 200 also gets added to every ASX 200 index fund and ETF.

Core Lithium share price can’t escape the falls

So that’s why some investors may be surprised that Core Lithium shares are getting punished today. It being the first day of this lithium stock’s ASX 200 membership and all.

But ASX lithium stocks are among the ASX shares being hardest hit today. Core Lithium’s stablemate Pilbara Minerals Ltd (ASX: PLS) is down 4.52% so far today at $2 a share. Liontown Resources Limited (ASX: LTR) shares have lost around 2.4%. While Allkem Ltd (ASX: AKE) shares are also in the red 2%.

So even though it’s Core Lithium’s first day in the ASX 200, it doesn’t look like this has saved the company from a rough start to the week.

At the current Core Lithium share price, this now-ASX 200 lithium stock has a market capitalisation of $2 billion.

The post What’s with the Core Lithium share price on Monday? appeared first on The Motley Fool Australia.

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• ASX 200 midday update: PointsBet jumps, energy shares sink, Vicinity’s upgrade
• Transurban share price jumps as dividends hit pre-pandemic highs
• 5 things to watch on the ASX 200 on Monday
• Have ASX 200 shares bottomed? Experts weigh in
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX tech shares, as a whole, haven’t had the best of years so far, with many coming under pressure amid rising interest rates.

You need look no further than the 41% year-to-date loss posted by the S&P/ASX All Technology Index (ASX: XTX) to gather what we mean. In morning trade, the All Tech index is down another 0.5%.

But ASX tech share Credit Clear Ltd (ASX: CCR) is bucking the trend today.

The credit management company’s digital billing and communication platform helps organisations achieve more efficient financial outcomes via artificial intelligence applications.

And in morning trade, the ASX tech share is up 14%.

Why are investors bidding up the Credit Clear share price?

ASX investor interest looks to have been piqued by Credit Clear’s announcement that it had achieved operational profitability in May. This came after the company saw a record month with $3.03 million in revenue.

The ASX tech share also credited its ongoing investment in technology and client success resources for achieving profitability two months ahead of earlier forecasts of July. Operational profit in May came in at $23,000.

The company said that its balance sheet is strong after its $7.5 million capital raise in June. Those shares were issued at 43 cents, 7% above the current share price of 40 cents. It added that with the cost of living looking to rise far faster than wages, it’s well-positioned to deliver accelerated growth in the 2023 financial year.

Commenting on the strong performance, Andrew Smith, Credit Clear CEO, said:

In 2022 Credit Clear has positioned itself to lead the market as an end-to-end credit management company. We’ve done this by providing a ‘best-of-both’ offering that sees award-winning AI technology combined with an experience-led and customer centric service offering.

The uplift in performance produced for our clients has been quantifiably proven in recent case studies and is contributing towards greater referral volumes from existing clients, and an influx of new clients that we have signed in the past few months.

We exit the 2022 financial year as a profitable market-leading company and our intention is to reinvest profits for growth.

How has this ASX tech share been tracking?

With today’s intraday gain factored in, the Credit Clear share price is down 5% in 2022.

That compares with a year-to-date loss of 17% posted by the All Ordinaries Index (ASX: XAO).

The post This ASX tech company just became profitable, and its shares are rocketing 14% appeared first on The Motley Fool Australia.

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More reading

• Top broker names 4 ASX lithium stocks to buy now
• Fortescue share price plunges 7%, but here’s why Twiggy’s not worried about a Chinese iron ore cartel
• Why is the Beach Energy share price tumbling 7% on Monday?
• Why is the Woodside share price sliding on Monday?
• 3 reasons not to worry about a stock market crash

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been a difficult year so far for the lithium sector. Concerns that supply may catch up with demand and put downward pressure on prices have been weighing heavily on sentiment.

This has led to many ASX lithium stocks recording sizeable declines in recent weeks and months.

The good news, though, is that this may have created a buying opportunity for investors, according to analysts at Bell Potter.

This morning the broker named four ASX lithium stocks that it rates as buys. They are as follows:

Allkem Ltd (ASX: AKE)

Bell Potter has a buy rating and $17.53 price target on this lithium producer’s shares. This implies potential upside of almost 80% for investors based on the current Allkem share price of $9.76.

The broker is expecting Allkem’s cash generation and profits to grow materially in the coming years. It explained:

We expect AKE’s near term cash generation to lift substantially into 2023 as strength in lithium commodity indices flows through to lagged realised prices. AKE is aiming to maintain 10% share of supply in a global lithium market experiencing unprecedented growth.

Green Technology Metals Ltd (ASX: GT1)

Its analysts are also bullish on this lesser-known ASX lithium stock. The broker currently has a speculative buy rating and $1.37 price target on its shares. This suggests potential upside of 95% for investors from current levels.

Bell Potter highlights that Green Technology Metals’ assets are in close proximity to key North American battery minerals markets. It said:

GT1 is in a strategic position in the fast evolving battery minerals supply chain with an existing lithium resource, a highly prospective tenement position and its strong ESG focus.

Lake Resources N.L. (ASX: LKE)

Another lithium stock Bell Potter is bullish on is Argentina-based Lake Resources. It currently has a speculative buy rating and $2.83 price target on its shares. This implies potential upside of over 90% for investors.

The broker is a fan of the company due to its 50ktpa lithium carbonate Kachi Lithium Brine Project in Argentina. It commented:

This project is expected to employ direct lithium extraction technology which has enormous ESG benefits compared with incumbent brine and hard rock lithium production methods. With this development project, uncommitted product offtake and an independent share register, LKE has significant strategic appeal.

Liontown Resources Limited (ASX: LTR)

Finally, the broker also has speculative buy rating and $3.06 price target on this lithium developer’s shares. This suggests that there is potential for 200% upside over the next 12 months.

Bell Potter commented:

LTR is funded for Kathleen Valley’s initial development capital where a definitive feasibility study outlined 658ktpa SC6 production and potential for conversion into 86ktpa lithium hydroxide. LTR is independent and debt free; a strong strategic position in a market for lithium facing supply shortages.

The post Top broker names 4 ASX lithium stocks to buy now appeared first on The Motley Fool Australia.

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More reading

• Top broker tips Allkem share price to jump 80%
• Mineral Monday: What you need to know about lithium and which ASX shares are cashing in on it
• 5 things to watch on the ASX 200 on Monday
• The lithium and iron ore ASX shares that I like right now: expert
• 3 ASX All Ordinaries shares that leapt more than 10% on Thursday

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The ResApp Health Ltd (ASX: RAP) share price has been put in the freezer as the company prepares to announce significantly consequential study results.

The healthcare technology company is currently the subject of a $180 million takeover proposed by Pfizer Inc (NYSE: PFE)’s Australian arm.

However, if its COVID-19 data confirmation study’s results are deemed unsatisfactory, Pfizer’s bid will drop to $127 million.

Right now, ResApp shares are halted at their previous closing price of 17.5 cents each.

Let’s take a closer look at what’s going on with ResApp on Monday.

The ResApp share price is in the freezer on Monday

The ResApp share price has been halted on Monday as the market awaits results from a clinical validation study.

The study will determine if the company’s technology can detect COVID-19 by analysing audio of a patient’s cough as accurately as previous studies have found.

A previous pilot study found the technology – dubbed COVID Algorithm – performs with 92% sensitivity and 80% specificity.

Pfizer will offer ResApp shareholders 20.7 cents for each share they hold if the soon-to-drop results find the COVID Algorithm performs with a sensitivity of at least 86% and specificity of at least 71%.

Pfizer has also ordered the results be confirmed by an independent statistician.

If the study fails to meet the above criteria, Pfizer will offer shareholders just 14.6 cents per share.

The 20.7 cent per share bid represents a 130% premium on ResApp’s close as of 8 April. The 14.6 cent per share bid represents a premium of 62.2% on the same close.

The ResApp share price is expected to remain frozen until the results’ release or Wednesday’s open, whichever comes first.

The company noted it’s expecting to return to trade on the announcement of the results.

The ResApp share price has gained 169% over 2022 so far. It’s also 280% higher than it was this time last year.

The post ResApp share price frozen as $180m Pfizer takeover bid hangs in the balance appeared first on The Motley Fool Australia.

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More reading

• This ASX share is defying the odds to crack new 52-week highs
• Why Computershare, Lithium Plus, Lynas, and ResApp shares are pushing higher
• Here’s why the ResApp share price is rocketing 50% today
• Why Australian Clinical Labs, Lake Resources, PolyNovo, and ResApp are rising
• ResApp share price halted ahead of Pfizer takeover update

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Fortescue Metals Group Ltd (ASX: FMG) shares are sliding today, down more than 7%.

Fortescue shares closed on Friday at $18.60 apiece and are currently trading for $17.31.

This comes as the S&P/ASX 200 Index (ASX: XJO) is down 0.77% in lunchtime trade. The benchmark index is being weighed down by the ASX Materials Index (ASX: XMJ) which is 4.46% lower so far today.

Today’s decline comes on the back of sharply-declining commodity prices last week amid ongoing concerns about the global economic slowdown.

Iron ore prices were particularly hard hit with iron ore futures in Singapore finishing the week almost 12% lower. That’s a level not seen since January.

It appears China’s zero-COVID strategy is heightening concerns of reduced industrial activity in the nation amid possible ongoing lockdowns.

It’s no secret China is a major consumer of Australia’s iron ore.

But here’s why Fortescue CEO Andrew ‘Twiggy’ Forrest says he’s not concerned about a possible Chinese iron ore cartel.

What’s this about a Chinese iron ore cartel?

As the Motley Fool reported last week, China indicated it may move to monopolise iron ore imports in a bid to bring down the price of the industrial metal.

The plan would see China Iron and Steel Association unite with state-owned steel groups, which would give the combined group the ability to set lower prices.

China has a voracious appetite for the steel-making metal, importing some one billion tonnes per year, or around 70% of the total global annual purchased iron ore production.

Should the plan prove successful and bring down iron ore prices, Fortescue shares could see lower profits.

Forrest’s thoughts on that cartel, however, should go some way to placate Fortescue shareholders.

As the Australian Financial Review reports, he dismissed the newest reports coming out of China, saying it’s “a story which gets trotted out every three years”.

“Demand for our product has remained strong,” he added. “And if global demand for iron ore goes down, the last man standing will be the lowest-cost producer. And that is Fortescue.”

The iron ore price slipped 5.7% overnight and is currently trading for US$122 per tonne. This time last year, the metal was trading for more than US$200 per tonne, before sliding to lows around US$90 per tonne in November.

How have Fortescue shares been performing?

Fortescue shares are down 23% over the past 12 months, pressured by iron ore prices coming off their highs.

Over that same period, the ASX 200 is down 11%.

Don’t forget, though, that Fortescue shares also pay a whopping 16% trailing dividend yield, fully franked.

The post Fortescue share price plunges 7%, but here’s why Twiggy’s not worried about a Chinese iron ore cartel appeared first on The Motley Fool Australia.

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More reading

• Fortescue share price sinks 5% as iron ore price slides
• Why Block, Fortescue, GUD, and Humm shares are sinking today
• ‘Force them to give us a discount’: ASX 200 mining shares lift despite China’s latest move to curb iron ore prices
• Green machine: Here’s why the Fortescue share price is rising today
• Fortescue share price sinks 9% amid painful market sell-off

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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