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The Openpay Group Ltd (ASX: OPY) share price plunged this afternoon. At close of trade, Openpay shares are sitting at $2.49 apiece, down 4.96%.

What was weighing on the Openpay share price today?

In addition to the broader tech share sell-off, the Australian Financial Review recently reported that the buy now, pay later (BNPL) providers have drawn up new standards to regulate the industry. Under the new regulations, credit checks will be more stringent.

This action follows a 2019 senate query into BNPL with the intention to protect customers. With big players like Afterpay Ltd (ASX: APT) involved in the mix, it’s no wonder that the Australian Securities and Investments Commission (ASIC) and Reserve Bank are throwing in 2 cents about the new rules.

ASIC believes that too many customers are being charged late fees. The Reserve Bank thinks that the fee merchants charge is too high. 

The uncertainty over how these new standards will impact BNPL players could also be contributing to the negative sentiment.

What else is Openpay up to?

According to its first half FY21 update, Openpay has commenced a launch in the US. The Openpay US leg ‘Opy’ is taking shape in San Diego, California. The company is also planning to expand into the healthcare and automative industries in the UK.

The company also has major new merchants on board, with Ford Australia agreeing to offer Openpay payment options in addition to Kogan.com Ltd (ASX: KGN). 

Openpay also made note of the new regulatory environment in its latest earnings report. The company states that “Openpay is a code compliant member of the Australian Finance Industry Association (AFIA). It is expected that the AFIA Buy Now Pay Later Code of Practice will commence in March 2021.”

Considering that the code of practice is so new, it’s difficult for the market to form an opinion on the impact it will have on business.

Openpay share price snapshot

The Openpay share price has fallen 24% over the past three weeks.

At the current price, the Openpay market capitalisation is $275.4 million. There are 108 million shares outstanding.

More reading

• IOUpay and Zip were among the most traded ASX shares last week
• Credit Suisse just rated the Afterpay (ASX:APT) share price as ‘outperform’
• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• ASX 200 up 0.7%: Vocus jumps on takeover update, Afterpay crashes 9%
• The tech-heavy Nasdaq is now in a correction!

Gretchen Kennedy owns shares of Kogan.com ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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S&P/ASX 200 Index (ASX: XJO) investors are increasingly worried about rising inflation. But you shouldn’t lose any sleep over it. At least, not yet.

Inflation, which was stubbornly absent over recent years, has been ticking up. Which shouldn’t come as any surprise.

Not with global central banks ramping their quantitative easing (QE) programs to record levels and holding real interest rates near or below zero. All while developed nations are pouring trillions of dollars into their economies to prime them for their post COVID recoveries.

The latest mammoth stimulus package is set to launch in the United States. This after the US Senate passed President Joe Biden’s US$1.9 trillion (AU$2.4 trillion) pandemic-relief bill.

Analysts have widely pointed the finger at this huge fiscal spending program for sending the yields on 10-year US Treasuries to a pre-pandemic 1.6%. But is this cause for share market investors to panic?

Janet Yellen confident on inflation control

Former Federal Reserve Chair and current US Treasury Secretary Janet Yellen stresses that developed nations had been trying to stoke inflation before the pandemic, when inflation was lower than desired.

Speaking on MSNBC, Yellen dismissed concerns that the new US stimulus package would drive inflation beyond target levels. She added, “If it turns out to be inflationary, there are tools to deal with that.”

Tech shares hit as value and recovery shares gain

Rising yields combined with a glimmering light beckoning at the end of the pandemic tunnel has hit high growth tech shares hard, while value shares and recovery stocks have gone the other way.

Yesterday (overnight Aussie time) the Dow Jones Industrial Average (INDEXDJX: .DJI) closed for a record high. This as the tech laden Nasdaq-100 (INDEXNASDAQ: NDX) fell 3% by closing and officially entered correction territory (down more than 10%).

The same shift is playing out on the ASX. The S&P/ASX All Technology Index (ASX: XTX) down 1% today, is now down more than 17% since its 10 February high. In that same time the wider ASX 200 is only down 1%.

A share market attitude adjustment

Mike Bailey, director of research at FBB Capital Partners explains the diverging paths we’re currently seeing between big tech shares and value shares. According to Bailey (quoted by Bloomberg):

Investors are feeling better about the recovery and looking to own improving fundamentals within large caps outside of tech and growth where valuations are more reasonable. The focus on better fundamentals at a reasonable price may be driving the Dow to new highs…

It feels like an attitude adjustment for tech and growth stocks. Investors have decided that these Covid winners just got too expensive and now it’s time for a valuation haircut.

Separately, Bloomberg notes that, “Equity strategists are as bullish as ever, despite all the nervousness among investors about sky-high valuations and rising rates.”

Abby Joseph Cohen is a senior investment strategist at Goldman Sachs. Speaking to Bloomberg TV, she said that while some shares may drop due to higher inflation and interest rates, other sectors will see strong rallies.

We are seeing this very significant rotation. We are seeing some movement now in those sectors that do better when we come out of lockdown, and the good news on the vaccine will be helpful.

Mislav Matejka, a strategist at JPMorgan Chase & Co, said that “airlines, hotels and auto suppliers are attractive, and investors should consider shorting online retail and technology”.

ASX airline and hotel shares

If Matejka is right, then ASX 200 listed Qantas Airways Ltd (ASX: QAN) shares could be looking attractive.

The Qantas share price is up 2% today and up 5% in the past 5 days. By comparison the ASX All Tech index is down 6% over the past 5 days.

Pure ASX 200 listed hotel plays are harder to come by. But The Star Entertainment Group Ltd (ASX: SGR) comes pretty close. The company operates 3 hotel and casino complexes in Australia.

Star Entertainment shares are up 4% today and Star’s share price is up 7% in the past 4 days.

More reading

• Legal action against ex Qantas (ASX:QAN) executive leaves share price on watch
• Is it time to buy these 2 ASX travel shares?
• Top brokers name 3 ASX shares to sell next week
• Crown (ASX:CWN) share price facing double Royal Commission trouble
• Why analysts are backing these 2 ASX travel shares

Motley Fool contributor Bernd Struben 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 Bruce Jackson.

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The Nuheara Ltd (ASX: NUH) share price opened 13% up today after the smart hearing technology company announced its IQbuds2 PRO (PRO) product has received US FDA registration.

The PRO is a hearing aid designed to provide high levels of hearing enhancement and amplification with up-to-date hearing technology.

The Nuheara share price has dropped since this morning but remains more than 2% higher than yesterday’s close.

More about Nuheara’s hearing aids

The PRO is the second product delivered from Nuheara’s IQbuds2 hardware platform. It is designed for those with moderate hearing challenges.

It’s expected to be launched in the US later this year, extending the company’s reach in the global US$9 billion per annum hearing aid market. The North American market alone is worth US$3.37 billion.

Nuheara advised that, as with all hearing aids with air conductions and wireless technology, the PRO is exempt from clinical trials. This means the product can go straight to market in the US.

IQbuds2 MAX (MAX) was the first product to be developed from Nuheara’s hardware platform. MAX is designed to meet the needs of those with mild hearing challenges.

Commentary from management

CEO of Nuheara Justin Miller said the development of the PRO and MAX are significant in making hearing health more accessible and affordable.

Over many years the business has invested tens of millions of dollars in our proprietary hearing technology platform. The IQbuds² PRO as a hearing aid device represents further opportunities to expand Nuheara’s leadership position in both hardware and software of hearing health devices. This registration effectively enables Nuheara to meet the varied hearing needs of a growing base of underserved customers with a wider spectrum of hearing loss.

Nuheara share price snapshot

The Nuheara share price is currently at 4.5 cents, up 2.27% from yesterday’s close. It is down 8% year to date but up 95% over the last 12 months.

Nuheara has a market capitalisation of $75.8 million and approximately 1.7 billion shares outstanding.

More reading

• IAG (ASX:IAG) share price takes wild ride on Greensill fears
• Here’s why the NAB (ASX:NAB) share price just hit a 52-week high
• Latest broker ASX buy ideas for 2021
• Here’s why the First Graphene (ASX:FGR) share price is rebounding today
• Brokers raise ratings on these 2 ASX shares this afternoon

Motley Fool contributor Brooke Cooper has no position in any of the shares 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 Bruce Jackson.

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The Insurance Australia Group Ltd (ASX: IAG) share price is on a roller coaster today. Shares in the insurer crashed 10.6% to a 5-year low of $4.30 before being placed in a trading halt. Since resuming trade, the share price is at $4.6o, almost 5% down on yesterday’s close.

In contrast, the S&P/ASX 200 Index is up 0.47%.

Let’s take a closer look at what is weighing on the IAG share price.

IAG and Greensill’s insolvency

As previously reported, Greensill was a supply-chain debt provider. Its business model was to provide funds to suppliers awaiting accounts receivable in the form of a loan to the purchasing business.

As with the 2008 financial crisis, Greensill collateralised these debts into securities and sold them to investors. Greensill became too reliant on a few companies and when COVID-19 hit, many loanees were unable to repay their debts.

According to the Australian Financial Review (AFR), BCC (an insurer IAG had a 50% stake in) sold policies to Greensill in 2019 covering the bonds. However, as IAG clarified in an announcement to the ASX, “it has no net insurance exposure to trade credit policies including those sold through BCC to Greensill entities.”

IAG sold BCC in April 2019 to Tokio Marine Management (TMM) and completed the transaction by July. IAG informed the market TMM retained the risk for all policies during this period – including Greensill. Both BCC and IAG refused to renew their policies with Greensill this year. Greensill admitted in court the move was catastrophic. That was the catalyst for its insolvency.

Before IAG released its statement today, investors were panicking. Many believed IAG may be liable for the bad debts owed to Greensill. Fearing the worst, owners sold off their holdings in the insurer. IAG then placed its shares into a trading halt.

When IAG informed the market no such liabilities existed, many came flocking back on the resumption of trade.

Simply put, as more investors were selling IAG shares than buying, the price collapsed. When more investors began purchasing IAG shares than offloading, the price increased. In economics, this is known as the laws of supply and demand.

IAG share price snapshot

Today aside, IAG’s share price has been sliding for the past year. One year ago, the insurer’s share price was $6.36. At today’s price, this calculates as a 27% loss in value. In fact, in mid-2018, the IAG share price was around the $8.80 mark.

IAG has a current market capitalisation of $11.7 billion.

More reading

• Why Adairs, Afterpay, IAG, & Livetiles shares are sinking
• The QBE (ASX:QBE) share price jumps to 2021 high on broker upgrades
• ASX 200 Weekly Wrap: ASX cools on earnings reality check
• These were the best performing ASX 200 shares last week
• ASX 200 up 0.35%: CBA half year update, IAG impresses, Zip shoots higher

Motley Fool contributor Marc Sidarous 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 Bruce Jackson.

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The National Australia Bank Ltd (ASX: NAB) share price continued its positive run and pushed higher again on Tuesday.

In fact, at one stage on Tuesday, the banking giant’s shares hit a 52-week high of $27.10.

When the NAB share price hit that level, it meant it was up an impressive 56% over the last six months.

Why did the NAB share price hit a 52-week high?

Investors have been buying NAB shares since the release of its first quarter update last month.

That update revealed that the bank has returned to profit growth, with cash earnings rising 1% over the prior corresponding period (which was COVID-free) to $1.65 billion.

This result was all the more impressive when you compare it to NAB’s most recent quarters.

According to the update, NAB advised that its first quarter cash earnings (excluding large notable items) improved 47% on the quarterly average it achieved during the second half of FY 2020.

Another positive was that its expenses fell 1% over the prior corresponding period thanks to productivity benefits and lower restructuring related costs. Looking ahead, management advised that it continues to target FY 2021 expense growth of between 0% to 2%.

What else is supporting its shares?

Also giving the NAB share price a lift was the response to its first quarter update by brokers.

Brokers such as UBS and Credit Suisse responded by putting buy ratings and $27.00 price targets on its shares.

But the most bullish broker was Goldman Sachs. It has a conviction buy rating and $28.93 price target. Which, based on the current NAB share price of $26.65, implies potential upside of ~8.5% over the next 12 months.

And if you include the $1.10 per share fully franked dividend that Goldman expects NAB to pay in FY 2021, this potential return stretches to almost 13%.

In light of this, don’t be surprised if the NAB share price hits new 52-week highs in the coming weeks.

More reading

• Can ASX bank shares keep rallying after hitting 52-week highs?
• ANZ (ASX:ANZ) share price outperforms on broker “buy” upgrade
• The ANZ (ASX:ANZ) share price just hit a 52-week high
• The big four banks offer these juicy dividend yields to ASX investors
• Is the NAB (ASX:NAB) share price a buy right now?

Motley Fool contributor James Mickleboro 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 Bruce Jackson.

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There’s a rotation underfoot on the ASX share market that will make picking 2021 winners a little more challenging, but the latest broker buys could offer clues on which ASX shares you should buy now.

Some stocks that have rallied right through the pandemic aren’t faring quite as well in the past few weeks.

The rotation from COVID-19 winners to losers is expected to continue even as experts are forecasting more gains for the S&P/ASX 200 Index (Index:^AXJO).

Latest ASX shares upgraded to “buy”

You don’t want to be buying the wrong shares as the market repositions itself for the next leg of the bull market.

But one stock that could put a smile on your face is the Pacific Smiles Group Ltd (ASX: PSQ) share price. Wilsons upgraded the dental practice to “overweight” as it looked at the impact of the group opening 20 new offices a year from 10 to 12 offices.

“Scale benefits in corporate dentistry are less about margin expansion and more about structural advantages,” said the broker.

“We conclude that PSQ’s scale-up agenda is feasible without a material change in capital structure nor any variation in dividend policy.”

Wilsons’ 12-month price target on the Pacific Smiles share price is $2.95 a share.

Right port of call

Meanwhile, the Qube Holdings Ltd (ASX: QUB) share price is another worth putting on your “buy” list, according to Jarden.

The broker looked at container movements across our nation’s ports and believes shares in the New South Wales logistics group is cheap.

Container volumes at the NSW port jumped by 14.9% in January 2021 compared to the same time last year.

Container recovery more promising than it looks

While the start of 2020 was marred by bushfires and the drought, its encouraging to see that this January’s figures were still 7.6% ahead of January 2019.

“Strong organic volume growth in January presents upside risk to Qube’s growth outlook for 2H21e, as future months begin to be inflated by cycling low, COVID-19 impacted bases,” said Wilsons.

“We think the stock remains catalyst rich, and that earnings will be supported as industry volumes should continue to normalise post-COVID.”

The broker’s 12-month price target on the Qube share price is $3.60 a share.

More reading

• Can ASX bank shares keep rallying after hitting 52-week highs?
• ASX 200 up 0.7%: Vocus jumps on takeover update, Afterpay crashes 9%
• Why ASX 200 tech shares could be in for another wild session
• ASX All Technology Index teetering on verge of a bear market
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Brendon Lau 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 Bruce Jackson.

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The First Graphene Ltd (ASX: FGR) share price has made a strong comeback today. This comes after the company announced that it has entered a non-binding memorandum of understanding (MoU) with Gerdau S.A.

During most of the day, the graphene producer’s shares were trading in the red, as low as 23.5 cents. However, the company’s latest news has given investors an upbeat perspective with its shares bouncing to 25.5 cents, up 6.2%.

What’s moving the First Graphene share price higher?

The First Graphene share price is rocking higher today after releasing details of its MoU to penetrate the Americas.

According to its release, the MoU will look into Gerdau to distribute First Graphene’s products in mutually agreed economic sectors and business areas. This includes territories such as Brazil, South America, and potentially the United States.

Furthermore, the MoU will allow both companies to set up formal proceedings to negotiate and establish a commercial agreement. Under the deal, First Graphene will provide Gerdau with its knowledge and technology for use in different Graphene applications. In return, Gerdau will invest and develop end-use applications and become the exclusive distributor for the company’s products.

Quick take on Gerdau

Brazil largest steel producer, Gerdau is a leading manufacturer of long steel in the Americas region. The company has steel mills located in Argentina, Canada, Colombia, Mexico, the United States, Brazil, and many others.

It transforms 13 million metric tonnes of metal scrap heap into steel every year, used across an array of industries.

Management commentary

First Graphene CEO Mike Bell welcomed the partnership, saying:

We are pleased Gerdau recognises the enormous commercialisation opportunities graphene offers industry with the creation of a dedicated graphene division.

Gerdau’s recognition of First Graphene as a key global producer is testament to the advances made by First Graphene in the commercialisation of this disruptive nanomaterial.

The association with Gerdau, a world leader in the long steel and specialty steel markets with a very strong position in the Americas, will undoubtedly accelerate the use of graphene across a wide range of applications.

Gerdau Graphene business unit general manager Alexandre Corrêa added:

We are enthused about the opportunities available to Gerdau in the graphene industry in the Americas. We have selected First Graphene as a partner because of their robust supply capability, product quality and technical expertise.

The First Graphene share price has accelerated by more than 88% over the past 12 months.

More reading

• Latest broker ASX buy ideas for 2021
• Brokers raise ratings on these 2 ASX shares this afternoon
• The Creso (ASX:CPH) share price fizzles despite new distribution deal
• ASM (ASX:ASM) share price in flux after deal with South Korean Government
• IOUpay and Zip were among the most traded ASX shares last week

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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In a whirlwind of a day for the S&P/ASX 200 Index (ASX: XJO), shares are being divided. Financials and traditional value shares are pushing higher, while tech is slaughtered.

However, in the mess of it all, 2 ASX shares have been upgraded by leading brokers.

2 ASX shares getting upgraded

ALS Ltd (ASX: ALQ)

ALS Ltd is an ASX share that has performed solidly over the year, adding nearly 34% over the period. However, the global testing, inspection, and certification company has been caught up in the selloff since mid-February. As a result, the share price is nearly 20% off its February high, trading at $9.54 today.

Investors were buying up the share yesterday, following the announcement of the company acquiring Investiga. The purchase adds Investiga’s pharmaceutical testing operations in Brazil and the east coast of the US to ALS.

This afternoon JP Morgan lifted its coverage on the ASX share to a ‘neutral’ rating. The broker noted the increase in geochemistry sampling activity and the acquisition as positives for the business. Subsequently, the price target was set at $9.80 a share for March 2022.

At the time of writing, ALS is trading down 0.9% to $9.46. The company’s market capitalisation is now $4.61 billion.

Infomedia Ltd (ASX: IFM)

The Infomedia share price has been left battered and bruised in the recent ASX tech share thrashing. Prior to the February sell-off, the part cataloging software provider’s share price had been hovering around $1.85. At that price, the share had only shaved off 7% since last year. However, the tech armageddon has left Infomedia’s share price down 32% at $1.34.

It certainly didn’t help when the company reported flat earnings growth in late February. Management put the poor result down to timing delays in negotiations and installations. Additionally, the reluctance to provide future guidance further rattled investors.

However, this hasn’t stopped Bell Potter from raising its rating to a ‘buy’ on Infomedia. The broker is expecting double-digit earnings growth in both 2021 to 2022 and 2022 to 2023 for this ASX-listed share. Bell Potter believes the share is undervalued at $1.35, compared to its price target of $1.75, implying nearly 30% of upside on the current trading price.

At the time of writing, the Infomedia share price is flat at $1.33. The company’s market capitalisation is now $499 million. 

More reading

• ASX 200 rises, TWE jumps, Zip sinks
• ASX 200 up 1.6%: Appen rebounds, ALS acquires Investiga, Woolworths upgraded
• Why Afterpay, Alkane, ALS, & Woodside shares are storming higher
• Why the ALS (ASX:ALQ) share price is surging over 6% higher today
• Infomedia (ASX:IFM) share price dips 9% on flat earnings

Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Infomedia. The Motley Fool Australia has recommended Infomedia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Creso Pharma Ltd (ASX: CPH) share price has been up and down today following a signed letter of intent (LOI) with ImpACTIVE.

At the time of writing, Creso shares are down 2.5% to 20 cents in late afternoon trade, after earlier peaking at 21 cents.

Let’s take a closer look at what Creso updated investors with.

What did Creso announce?

The Creso share price is rising after providing investors with plans to enter the growing North American sports and recreational market.

According to the release, Creso advised that it has entered a non-binding LOI with ImpACTIVE to distribute its CBD-based products. This includes the company’s CannaDOL and CannaQIX10 products which are expected to drive sales in the North American market.

Based in Canada, ImpACTIVE is a company that is focused on providing a range of CBD-based products for people suffering from muscle and joint inflammation. The use of its alternative health treatments negates the need for pharmaceutical drugs.

ImpACTIVE was formed by current and former high-profile athletes who saw a gap in the market for people struggling with injury.

Terms of the agreement

Under the LOI, both parties will commence formal discussions to enter a commercial agreement on or before 1 April 2021. While the terms of the contract are still being finetuned, the deal will see Creso’s products distributed through established sales channels across America and Canada.

Furthermore, Creso will be granted rights to become an authorised supplier of ImpACTIVE’s CBD roller application in Switzerland and Europe. This is also projected to launch around April 2021.

The company has its sights on targeting the sports and recreational sector by providing easy access to its products. In Switzerland alone, Creso has developed relationships with all key wholesalers, reaching over 2,100 points of sales. This comprises pharmacy networks, drugstores, specialised retailers as well as 400 sports and fitness centres.

The initial period of the contract will be set for 1-year and will automatically renew. Either party may cancel the agreement provided it is done within 90 days before the end of the term.

What did management say?

Creso’s commercial director Jorge Wernli commented on the partnership:

We are very proud to enter the sports and recreational market with such a high calibre partner as ImpACTIVE. This LOI is important for Creso Pharma, as it further broadens our international footprint and provides another large market opportunity.

We look forward to working with ImpACTIVE to ensure all products are well received in Europe and North America, and also leveraging their innovative product range to further add to the Company’s growing sales profile.

About the Creso share price

The Creso share price has performed relatively well over the past 12 months, jumping 192%. Although the company’s shares were mostly flat until last November, positive investor sentiment picked up after the landmark announcement that the UN had decided to reclassify cannabis as a less dangerous drug.

On current valuations, Creso has a market capitalisation of around $195 million.

More reading

• Here’s why the Creso Pharma (ASX:CPH) share price is storming 11% higher

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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The Australian Strategic Materials Ltd (ASX: ASM) share price is trending downwards today.

Despite an early rise of 1.3% in morning trade, the share price has slipped and is now 0.5% down on yesterday’s close. At the time of writing, shares in the metal company are selling at $5.30. In comparison, the S&P/ASX All Ordinaries Index is up 0.3%.

Let’s take a closer look at the company’s most recent announcement and how it could be affecting the ASM share price.

What did ASM announce today?

In a statement released to the ASX, ASM announced it had signed a memorandum of understanding (MoU) with the South Korean, Chungbuk provincial government and Cheongju city government. The MoU is for the establishment of a metals plant within the Ochang Foreign Investment Zone.

The scope of the MoU includes “supply of utilities, administrative licenses and permit procedures…”

The plant is located 115km south of Korea’s largest city, Seoul. It will initially produce neodymium-iron-boron powder and titanium powder.

The company will also receive an as-yet undisclosed government grant as part of the deal.

Management commentary

Speaking on today’s announcement, ASM Managing Director David Woodall said:

This MoU, along with the strong support from the Korean Ministry of Trade, Industry and Energy (MOTIE) and the Chungbuk Provincial Government, provides ASM with confidence to build the metals plant in the Ochang Foreign Investment Zone. With key Korean manufacturing companies like LG Chemical, Samsung SDI, SK Hynix, and Hyundai Mobis within close proximity, we are confident that building our first metal plant in this well-established industrial area will provide significant benefits.

The Governor of Chungbuk, Si-Jong Lee, also gave his thoughts on the future plant:

To sustain the growth of the Chungcheongbuk-do economy, we strongly support this investment. ASM is establishing its Korean headquarters, 2 R&D centre and metals plant in the Ochang Foreign Investment Zone. This will provide key rare earth metals to the Korean economy and local employment to revitalise our local economy.

ASM share price snapshot

Despite today’s negative movement, the ASM share price is on the upward swing. Listed on the ASX at a price of $1.40 on 30 July 2020, the share’s value has increased by 277.1%. ASM shares reached their highest price ($6.84) in December last year.

More reading

• ASM (ASX:ASM) share price jumps as scoping study supports $45m plant build

Motley Fool contributor Marc Sidarous 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 Bruce Jackson.

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