There have been occasions where a certain shift in the market confounds my understanding. Prior to any other recourse, I generally reassess my own understanding and assumptions, keeping in mind that it’s more plausible for me to have erred in my interpretation than for the extensive knowledge of countless skilled professionals to have overlooked significant insights. Nevertheless, there are times when I find myself at a loss to explain the trading patterns of a certain stock or the conflicting performances within a particular sector or industry. Currently, it’s the lithium stocks sector that offers such a conundrum.
When it comes to the lithium sector, essentially three companies present accessible investment portfolios: Albermarle (ALB), Sociedad Química y Minera de Chile S.A. (SQM), and Lithium Americas Corp. (LAC). An initial assumption might be that these companies would display synchronized movement in their stocks, fairly commonly observed within clusters of commodity mining stocks and dictated by the value and future viability of the commodity they mine. However, the last month has contradicted this expectation.
As evident from recent trends, the most successful player has been SQM, followed closely on the heels by ALB. Both these companies have witnessed double-digit growth in the past month. LAC, on the other hand, seems to have regressed, demonstrating a decrease of over 4%. At first glance, this appears reasonable.
Supporting factors for this disparity can be deduced from the recent economic data. As the data from early June onwards suggest, previous apprehensions of a potential U.S. downturn, which would have inevitably lead to a worldwide economic arrest, may have been overstated. This optimism in economic stability extends to become good news for the lithium sector.