WA Index falls for the first time in 12 months

Down 7.6 per cent for the month, the Index followed the downward trend in other world indices during the month, and continued to show the volatility in world equity markets.
“Following a very strong 2009 where stock values rose by 123 per cent in Western Australia, January has seen the Deloitte WA Index experience a sharp fall in value,” said Keith Jones, managing partner of Deloitte in Western Australia.
The fall was largely driven by Wesfarmers Limited, Woodside Petroleum Limited and Eldorado Gold Corporation posting significant declines of $3.8 billion (12 per cent), $3.6 billion (10.3 per cent) and $1.1 billion (12.8 per cent) respectively.
Some smaller stocks performed well in January including Amcom Telecommunications Limited, Iron Ore Holdings Limited and Berkeley Resources Limited, with the market capitalisation of each company increasing by 45.2 per cent, 40.9 per cent and 30.5 per cent, respectively.
In January, Amcom announced it had successfully completed the capital management initiative announced during 2009, which involved the cancellation of 81 million options and the underwriting by Euroz Securities Limited. This resulted in the raising of $25 million, net of the option cancellation and transaction costs, placing Amcom in a net cash position.
Shares in Iron Ore Holdings rose following a new discovery at its Koodaideri South project in Western Australia. High Grade iron mineralisation had been reported at the Fingers prospect, with significant intercepts grading up to 59.9 per cent iron. This project is located near Rio Tinto and BHP Billiton’s iron ore mining operations in the Pilbara's Yandicoogina region.
In January, Berkeley Resources Limited announced it had terminated its head of agreements signed in March 2006 with French nuclear power group Areva NC. In doing so, any rights previously granted to Areva for off-take or marketing of uranium production from Berkeley’s projects have been terminated with immediate effect, leaving Berkeley free to negotiate similar agreements with other parties. Further, encouraging drilling results of the Salamanca Uranium project were announced by the company in January.
The major world indices also saw declines during January. The Australian All Ordinaries experienced the largest fall of 5.9 per cent, with the FTSE 100 and Nikkei not far behind, with decreases of 4.5 per cent and 3.3 per cent respectively.
Most commodity prices were down in January, including significant falls for zinc (17.2 per cent) and lead (16.7 per cent). A fall in demand from China, coupled with overproduction and resultant stockpiling of zinc and lead, contributed to the fall in price during January. Copper, oil, aluminium and uranium also posted declines of 8.4 per cent, 8.2 per cent, 6.8 per cent and 4.5 per cent respectively. Platinum and palladium were the only commodities to demonstrate positive movement, with increases of 2.7 per cent and 2.4 per cent respectively.