Daily Brief Energy/Materials: S&P 500 INDEX, Lake Resources Nl, Omai Gold Mines, West China Cement and more

• Support levels discussed in our 8/8/23 Compass broke, leading to a change in character (from buy the dup to sell the rip) and a deeper pullback.
• Supports we were watching included the 50-day MA and 4460-4475 on the S&P 500, $371.50 on $QQQ, and $190-193 on the $IWM; these are now resistance moving forward
• Longer-Term support on the S&P 500 is at 4300-4325 (nearly hit on Friday) and 4200, and we will remain constructive as long as these supports hold.

• The changes for the next rebalance will use closing prices from 31 August, will be announced after the close on 8 September with implementation at the close on 15 September.
• One stock is very close to the 85% cumulative market cap inclusion threshold, while there are two stocks that are near the 98% cumulative market cap deletion threshold.
• With one inclusion and capping changes, estimated one-way turnover at the rebalance will be 3.5% resulting in a one-way trade of US$20m. That could change over the next week.

• Today’s results highlight the strong continuity of high-grade along the Wenot Shear and the Company’s ability to efficiently fill wide gaps in zones which will be important for the upcoming resource update.
• The Company has completed 14 drill holes, totalling 5,235m.
• This morning, Omai Gold Mines Corp. (OMG:TSXV, OMGGF:OTC) announced additional drill results from the Omai gold project in Guyana.

WCC’s H1/23 results were softer than expected, as the company reported lower sales volumes and larger-than-expected ASP declines across its plants in Mainland China. In particular, sales volumes and ASP in the company’s stronghold of Shaanxi fell 4% and 16% y-o-y, respectively. Positively, WCC’s expansion in Africa has been progressing well, with overseas operations now accounting for 27% of revenue. The company’s plants in Africa enjoy substantially higher margins than those in China.

In our view, the key risk for WCC is uncertainty regarding the extent of its African expansion, with the company reportedly developing another USD 100 mn cement plant in Rwanda. We believe further expansion into Africa will fundamentally change WCC’s risk profile.

 We move our recommendation on the WESCHI 4.95 26 to “Buy” from “Hold”.