One of the phrases investors loathe more than anything is ‘blue sky thinking as we lay out deliverables for the next 12 months’.
The reason why tends to be that such corporate speak is a copy and paste of 12 months earlier where timelines have slipped, and investor patience is beginning to wear thin.
For much of the last decade, stock markets have been looking at those businesses with ‘potential.’
The problem with ‘potential’ however is when it is not realised.
According to the Wall Street Journal, the last 12 months was the third year in a row fundraising, deals and total value fell, while the Times newspaper reported a more than 20% fall in deals from 2023.
Previously, low yields on bank balances forced the hands of the investor looking for a return with investors willing to wait longer for a payday as the money had nothing better to do being locked away in the bank.
It was that ‘potential’ thing that investors were waiting on but something happened during COVID (hint, that something was fiscal and monetary stimulus on proverbial steroids that turbo-charged demand) that gave way to deliverables as the main game in town.
The pandemic, while tough to navigate, was also the period of time where ‘cost of living’ became the phrase and the inflation spike following COVID meant higher interest rates were ideal for those looking for a deliverable.
Parking money in property or blue-chip linked exchange-traded funds are historically rather bland, but during a cost of living crisis performed spectacularly well and it was that deliverable which rewarded investment.
However, in 2025 with the inflation tide going out, the Reserve Bank of Australia lowering the official benchmark, property still hot and a rather toppy share market, the ‘potential’ for more growth is simply not there.
And with a new world order looking more assured than the 2016 version when US President Donald Trump was first elected, markets are taking another look at the resources sector but doing so with a lens of deliverable!
Competition for capital is no longer solely about uncovering new mineral reserves.
Those businesses on the cusp of producing revenue are likely to dominate media reporting, and for that matter investor interest.
Innovation in extraction techniques, environmental stewardship and supply chain resilience, while compelling for selling the efforts around controlling expenses, are falling foul of analysts who lost patience with narratives around potential.
Living up to potential in this stage of the cycle is all about achieving the deliverable and something investors can increasingly bank on.
Dan Petrie is Mining.com.au’s Head of Data, a former data editor at Bloomberg LP, analyst at Macquarie Bank and contributing data expert to Google Digital News Academy.
Write to Dan Petrie at Mining.com.au
Images: Mining.com.au & Unsplash
