Trade war risk and uncertainty now well at work here. Waiting...

Trade war risk and uncertainty now well at work here. Waiting another 2 to 3 months for UBS negotiations with bidders while China and the US descend into a trade war will keep nervous sellers taking risk off the table and buyers on strike. I can see the price testing 34c shortly, although 34c might not be low enough after 40c breaks to encourage buyers to really bother making another stand. Weekly support at 30c more likely to prove firmer if the over-all market takes a dump. Remember yesterday's chart, SFX is 100% correlated to ASX falls but 0% correlated to ASX rises.

A full on protracted trade war is a justifiable excuse for why the sale process might come up empty. China, which was already struggling to turn around an economic slowdown even after enormous stimulus measures early this year, looks most likely to come out worse of the two superpowers. China might well find out that their development miracle rode on the back of mercantile manipulation and massively unbalanced trading, what a terrible juncture to put their system and strength to the test. SFX have Chinese off-take partners who traditionally prove worthless in times of stress, and the Zr-TiO2 markets/prices are inexorably linked to Chinese demand and economic strength.

It is entirely understandable that bidders might drag their feet or pull out all together if no trade deal looks forthcoming and risk looks too great. Large shareholders and the board will probably baulk at selling for a fire-sale price in the middle of market melt down. Outcome is then the sale process "abandoned due to market conditions outside the company's control" and then straight into a CR trading halt (likely a rights issue given the price slump). Shares back to 25c on the CR and fears that the stock market collapse might not be the real reason no buyer bought. Maybe after a look under the hood everybody politely walled away? Meanwhile, company is cooking at $1M per month will need to downsize staff and minimise burn rates while waiting for the cycle to turn back again. Dilution at that burn rate and those prices will quickly blow up the share register!

Praying for a trade war deal soon, or at the very least a 180 degree change in aggression and negotiations with good will and a rebounding market. Market risk... this is the reason not to hold junior resource stocks over long periods with no news and no likely upside. Management went this path and the timing of international events is bad luck but sympathy doesn't pay the bills. I wonder how much the board and major shareholders (who lets face it will decide on what offer is presented to the shareholders or not) have reduced their price expectations due to the trade war risk dynamics? Are they willing to sacrifice short term pain for long term gain and knock back low ball offers or would they take the market price of the day and just move on if only a disappointing offer is made?

Commentary I'd rather be making from the cheap seats of Not Held disclosure. Damn you Franpower grrrr.

Good luck