Commodities

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.

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.

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.

Copper fight highlights merger of equals flaw

28 Feb 2011

Lundin and Inmet wanted a quiet, nopremium marriage. Now a third copper miner, Equinox Minerals, has thrown in a $5 bln hostile bid for Lundin at a 26 pct premium. One message is that mergers of equals are usually copouts that can be easily trumped.

Prolonged oil shock threatens global growth

24 Feb 2011

Prices nearing $120 a barrel raise the spectre of previous spikes. In the emerging world, inflation is the main concern. Recession risks are highest in postbubble western economies. But oil would have to remain high for a sustained period to inflict serious damage.

Glencore partners eye Goldman-style bonanza

22 Feb 2011

When the Wall St bank went public in 1999, 221 partners shared $16 bln. The Swiss commodity group's 500 partners could share $60 bln an average of $120 mln when it floats. As with Goldman back then, the current Glencore generation will scoop up the entire franchise value.

G20 can’t control commodities – but rates would

18 Feb 2011

Nicolas Sarkozy's dream of guillotining commodity speculators won't find support in the G20. Brazil doesn't want any trading curbs and blames loose Western money. Brazil is right, tighter money may be the best way to fight speculation and may already be beginning to help.

Could US states devalue their way out of trouble?

18 Feb 2011

Some economists think weak EU economies could regain health by abandoning the euro. A few U.S. states are even contemplating their own currencies. A chapter from an imagined future history textbook casts light on the consequences of states adopting alternatives to the dollar.

Gold bears may be overlooking Asia’s gold bugs

17 Feb 2011

The yellow metal occupies a special place in the hearts of Asia's savers. With concerns about inflation mounting, gold's popularity is rising in India and China with official encouragement. That may confound growing suspicions that gold's rally has run its course.

LSE on better side of underwhelming TMX deal

9 Feb 2011

The London exchange bags the CEO seat and pays the smallest of premiums. Though the synergies are slim, the strategic logic is OK: it's not a bad move. But if the deal completes, the new group still won't be too big to be taken over assuming TMX does not get a counterbid first.

Buoyant copper is riding for a fall

9 Feb 2011

The red metal has busted through $10,000 a tonne, partly because of its links to Chinese growth. Demand outstrips supply, so the market is tight. But financial participants have clouded the picture. When they lose interest, or if China proves fickle, copper prices could tumble.

As interest rates climb, gold could tank

1 Feb 2011

The yellow metal's price has tripled in the last five years as investors, wary of money printing, craved something solid. Now cash is coming out of one of the world's biggest gold funds. As global growth and inflation picks up and interest rates rise, gold could fall hard.