Glencore's shares fizzle on first day of trading

 

 

Reuters May 24, 2011 6:28 AM

Read more: http://www.vancouversun.com/business/Glencore+shares+fizzle+first+trading/4830814/story.html#ixzz1NHE6g17R

Glencore

Photograph by: Glencore, Glencore

LONDON - Commodities trader Glencore's shares were stuck under water on their first day of official trade, dashing hopes of a strong start after it set a mid-range flotation price for London's largest ever offering.

Sources close to the matter had said Glencore, the world's largest diversified commodities trader, felt it had left "money on the table" with an offer price of 530 pence (85 cents U.S.) that valued the company at 36.7 billion pounds ($59.15 billion).

The shares, however, dropped on the grey market after the offer price was set on Thursday, touching lows of 506 pence on Monday, when miners were battered by worries over Chinese demand and threats to a European recovery.

By early Tuesday, the first day of unconditional trading, the shares were changing hands at 526 pence, up 2.3 percent, outperforming a 1.6 percent rise in the mining sector where stocks were recovering after Monday's sharp falls.

The shares begin trading in Hong Kong on Wednesday.

While some analysts still expressed concern over Glencore's valuation, several analysts and bankers brushed aside worries about the stock trading below the offer price. They said the market debut should be seen as a success given its size and continued uncertainty in both commodity and equity markets.

Analysts at Numis in London said the listing showed "confidence in a robust long term commodity story."

"It has performed in line with the market. The interesting bit will come when they release their earnings, because their growth forecasts for this year were very aggressive for the mining division," analyst Andrei Kroupnik at Collins Stewart said. Glencore is due to publish its results for the first quarter of the year by the end of next month.

"Ultimately, it has only been a few days. Markets are volatile and commodities are still mostly going down."

Read more: http://www.vancouversun.com/business/Glencore+shares+fizzle+first+trading/4830814/story.html#ixzz1NHEJojKm

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