Commodities’ correction is good for growth 5 May 2011 Bullish investors in commodities are choking on their own bubbly. What's frightened the speculators most is weaker data, especially in the United States. The pullback is welcome and necessary because the excessively high prices are a big obstacle to global recovery.
Oil’s slide below $100 sets record straighter 5 May 2011 Like a slowmotion echo of the flash crash a year ago, Thursday s market plunge reflected not one factor but many. With Fed policy stoking speculation, U.S. data suggesting another slowdown and Europe running at two speeds, more volatile trading may be the logical response.
Glencore price range is a stretch 4 May 2011 The commodity trader's IPO values it at $47 to $58 bln before new money. If EBITDA returns to peak levels this year, the lower end marks a reasonable price by mining benchmarks. Cornerstone investor support is striking, but a solid performance post float is far from assured.
Glencore boss can’t afford to stop at $10 bln 4 May 2011 That's the value of Ivan Glasenberg's stake in the commodity trader at the midpoint of its IPO valuation. The worry for new investors is that the CEO has little incentive to add to his wealth. But executives made billionaires by IPOs tend not to lose their ambitious gene.
Abu Dhabi’s Glencore bet won’t be an easy win 4 May 2011 One of the emirate's flagship funds is ploughing $1 billion into the commodities trader. Crisisera investments in Daimler and Barclays delivered stellar returns. But with commodities already hot property and other investors lining up, Abu Dhabi may struggle to repeat the trick.
Mega-syndicate puts Glencore investors in the dark 4 May 2011 With 23 banks and brokerages on the trader's flotation, independent voices on the company's valuation are few and far between. Pricing Glencore's quirky business mix was already going to be tough. It's hard to see how investors benefit from such large syndicates.
Glencore’s peak timing not only echo of Blackstone 3 May 2011 It has become a Wall Street meme that the commodity trader's planned $12 bln IPO marks the top of its industry's boom, just as Blackstone's did. But similarities of opacity, nonstandard governance and sovereign fund investment may also make the comparison apropos.
Hong Kong’s yuan IPO buyers should heed history 26 Apr 2011 China's latest currency innovation recalls the nowforgotten Bshare market, where foreigners could invest directly in mainland stocks. With China's capital account closed, Hong Kong's yuan shares will have scant liquidity. When it opens, they may become irrelevant.
Barrick tries spinning copper into gold 25 Apr 2011 The Canadian firm jumped into the battle for copper miner Equinox, with a $7.7 bln bid that trumps one from China's Minmetals. It's a big premium from a company that mainly touts gold credentials. Barrick's shift as prices of both metals soar may not be the best use of resources.
Glencore chairman shambles is an IPO red flag 14 Apr 2011 The Swiss commodities trader hasn't appointed a chairman, yet is pressing on with its IPO. The firm underestimated the difficulty of getting a strong candidate, or underestimated its importance. Glencore says it has found the right person. The name needs to be a real heavyweight.
Glencore shows how not to launch an IPO 14 Apr 2011 The Swiss commodities group has at last appointed an independent chairman Simon Murray, a member of Hong Kong's business elite. But delay, a leak that exBP CEO John Browne was in the frame, and a less than helpful press release have all weakened his authority from the getgo.
Stopping hot money is dangerous soft option 5 Apr 2011 The IMF wants capital controls in the policy toolkit. It may sound like a good idea with so much money sloshing around. But such barriers impose large and opaque costs on the global economy and encourage fiscal indiscipline. Emerging market officials should resist the temptation.
Brazil sends bad market signal scalping Vale’s CEO 1 Apr 2011 Roger Agnelli fought the state's designs to push the $180 bln mining giant into lowreturn, if laborintensive, businesses like steel production. With President Rousseff getting rid of him, investors must prepare for a strategy that favors jobs over profit more Pemex than BHP.
Glencore chair will determine governance discount 29 Mar 2011 The commodities trader needs a tough chairman to lead its possible IPO. If prospective investors aren't convinced their interests will be protected, the valuation will suffer. The new chair could show his or her mettle by taking a robust line on the appointment of nonexecs.
Rosneft a dubious long-term investment for BP 28 Mar 2011 The Russian oil giant has outperformed BP since the pair agreed a share swap in January. That may make the deal look financially sound even when a strategic exploration tieup is in trouble. But further upside for Rosneft may be limited, and the deal terms may be revised anyway.
Reboot of yen carry trade looks tempting but risky 17 Mar 2011 The Japanese currency is at historic highs, despite weak growth and low interest rates that have little chance of rising soon. Possible intervention also would weaken the yen. That makes the borrow yeninvest elsewhere trade look interesting but volatility makes it perilous.
Tsunami may quicken investors’ rush to safe havens 11 Mar 2011 Japan's earthquake, weak US and Chinese data, and Saudi unrest may hasten a flight to safety. With gold and oil expensive, investors have pushed up alternative inflation hedges like wheat and copper. Fears over growth and stability now leave these risk assets looking vulnerable.
Facebook virtual currency starts to reap benefits 8 Mar 2011 The social network has to work hard to justify its valuation. Inserting itself as a financial middleman by offering Warner flicks online for Facebook Credits is a good start. While movies and games are a natural fit, it's far from becoming an Internet reserve currency.
Little downside from bulking up Glencore syndicate 4 Mar 2011 The commodities giant may hire more banks to prepare its mooted $60 bln IPO. Doing so allows Glencore to pressure fees, reach more investors and quash negative research. The banks get league table credit and a cut of some $240 mln in fees. The only potential losers are investors.
Glencore story is striking but not yet compelling 3 Mar 2011 The Swiss commodities trader, currently pondering an IPO, says quarterly operating profit is near its 2007 peak. But the impressive financial performance isn't in itself a guarantee that Glencore will achieve its mooted $60 billion equity valuation.