One of the best things, and worst, about the stock market is that it can be counterintuitive. The example of this over the past week was the way the FTSE 100 soared after a chunky (and misguided) interest rate hike, with gloom and doom all around from the media. A predicted London property market crash from lenders, the run up to a £50bn tax raid from the Government (which we prefer to Liz Truss’s tax cuts), and the Bank of England’s prediction of the longest recession ever (and ever, amen.) The lucky aspect here is that in 40 plus years of listening intently to economic predictions, I do not recall many, if any, that were right. They are normally just clickbait / self promotion / Project Fear.

Peak Doom

Therefore, it was perhaps not too surprising that the week ended on a high note for leading shares, as we have clearly hit peak doom. To be fair, hopes that China will re-open after its draconian anti-Covid measures, were a driver. Otherwise, it would appear that at least some, myself included, are taking the view that the current economically suicidal rate hike cycle will end with central banks blinking. This may not be entirely wishful thinking, as the current strategy risks widespread consumer default, as opposed to the Truss strategy which risked Government default. All in all, the latter is preferable. It may be the case that after years of QE, we are doomed to have the choice of one or the other.

China Opening

One of the things we know is that there tends to be a delay between a rebound in US stocks (14% on the Dow last month), to the FTSE 100 (up 2% on Friday) and small cap stocks (up 2% on the week.) On this basis it could very well be that there is some mileage to be had in the China opening up story for the minnows, especially those focused on copper, and the new flavour of the month, lithium. Indeed, we seem to be entering a decent bullish patch for the lithium plays, and if anything the fact that small cap investors are enthusiastic about anything currently is a definitive plus.

Critical Metals

This week’s clear winner in terms of the new enthusiasm for critical metals was Firering (FRG), with its shares up three quarters. The rise was off the back of an $18.6m investment to fund the advancement of the Atex Project and adjacent Alliance licence (once granted) in Côte d'Ivoire. The recent rises for FRG shares now take the stock to just below the IPO price, so the shares are still not exactly overstretched.

Something of a relief in terms of being one of this week’s bouncing situations was another company in the critical metals space, literally Critical Metals (CRTM). Here the shares rose sharply as traders looked to production at the copper / cobalt specialist, which expected to commence by the end of year. With the shares still only at 15p, versus the 20p placing price, and only some 53m shares in issue, it may be time for Critical to get on the front foot in the run up to production news.

Trickle Down

Speaking of the end of the year, it will be interesting to see whether there will be a trickle down to the other mining minnows investors tend to look at? Perhaps particularly favoured in this respect would be the likes of Tertiary Minerals (TYM), Galileo Resources (GLR) and Thor Mining (THR), all of which have delivered positive news of late.

Kefi

One can tell when the stock market is back in the groove, when even stocks that have been curmudgeonly in terms of their share price movement responding to good news, finally get off the ground. This week a couple of situations were notable. Despite some Twitter comments to the contrary, Kefi Minerals (KEFI) continued to rise from a 0.65p breakout towards the Bulletin Board Heroes near term technical target of 0.9p. The reported end to hostilities in North Ethiopia, may have helped too. Through 0.9p, the 2-3 months target could be as high as 1.6p, which would really confound the doubters.

United Oil and Gas

Also, in the category of a relief rally, i.e. that it is such a relief that the shares have finally risen, is United Oil and Gas (UOG). Here perhaps, after years of underperformance, it could be the case that firstly, the pesky sellers are out, and second that the recent ASH-4 well news means that an inflection has been reached. The magic words in the UOG RNS were, “we expect that this well will deliver a material increase to current production levels.”

Wishbone / Greatland Gold

It is said that actors making a movie do not necessarily know whether the production will be a blockbuster, or not, and maybe there is a read across to small cap interviews. The interview to end the week with Richard Poulden, Chairman Wishbone Gold, was to my mind a real humdinger. This was off the back of Poulden alerting us to Australian billionaire Andrew Forrest significant stakebuilding in Greatland Gold (GGP), the Havieron play, and the significance to Wishbone’s nearby Redsetter asset.

Given that the logical assumption is that if you add Forrest, as well as Newcrest’s 70% ownership of Havieron, we are looking at something of a feeding frenzy in this part of Western Australia, something that WSBN can only benefit from. But rather than focusing on this, it would appear that the punters listening to the interview were fixated on the timing of Wishbone delivering assay results. Alas, common sense dictates such results can only be released once all the drilling has been completed, and the shares headed lower. Sometimes in the small cap space it would appear the bigger (and more important) picture gets overshadowed by short term contingencies.

EQTEC / Hydrogen Utopia

Of course, London investors are traditionally focused on the resources space, rather to the detriment of renewable energy. This is hardly surprising given that it is easy to be an expert with regard to holes in the ground, but not so much on what tends to be hight tech green technology. But at least the recent recovery has continued for EQTEC (EQT), as the waste-to-value solutions company for hydrogen, biofuels, and energy generation announced a R&D facility successfully upgraded for hydrogen and RNG testing. Mixed plastic to fuel technology group Hydrogen Utopia (HUI) were up nearly 25% on the week as investors continued to warm to the recent convertible loan investment from one of its significant shareholders. This made the company’s already strong cash position yet stronger. It continues to be one of the few recent IPOs trading above its listing price, in this case 7.5p.

The Standard List Minimum

This is all the more impressive given that the Hydrogen Utopia has achieved this via the Aquis exchange. Indeed, at 9.5p the market cap of HUI is £36.5m, well above the £30m that would be required to be on the standard list of the LSE. Remember that until last year the minimum requirement was £750,000. Interestingly enough, Marula (MARU), KR1 (KR1), Good Energy (GOOD) are all Aquis stocks with market caps well over £30m, along with the Aquis Exchange (AQUIS) itself, and could all head off to the LSE. But of course, Aquis needs as many strong companies as possible to get its own momentum building.

The alleged reason according to the FCA for the £29.25m in minimum market cap hike was “to give greater clarity and trust to investors with respect to the types of company on the main market.” The real reasons were perhaps that the FCA could not cope with its workload and wanted less and larger companies to regulate. The effect was to ensure that fewer private companies decide to list (a loss to the UK economy), those that do had to raise that much more money at a time (2022) when so far raising money has been extremely tough, and that the main reason to be on the stock market – to use the value of your paper to raise money, has been eroded.