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Investors profiting from mining stocks

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Written by:
08/02/2008

Continuing concerns over the global economy and fear that commodities and metal prices could be next in line, have prompted investors to turn their attention to the mining sector. 

Angus Rigby, chief executive officer of TD Waterhouse, said: “Mining giant BHP Billiton’s 3.4-for-1 share offer for Rio Tinto was rejected earlier this week after the board concluded it was not in the best interests of shareholders.

“The offer would have resulted in the BHP/Rio group controlling 35% of the iron ore market and came despite a combined blocking attempt from the Chinese state-owned miner Chinalco and US miner Alcoa to buy 12% of Rio Tinto’s UK-listed shares for £7.05bn.   

“The fast-paced activity surrounding both of these companies has had a palpable effect on their share prices. Rio was trading up, reaching £54 a share earlier this week. BHP also experienced a surge in its share price, lifting to £15.25 per share, but now is trading down by over 8% on last week.

“Continuing turbulence in the markets this week has adversely affected share prices in the financial sector, and consequently many of our customers have looked to profit from volatility by continuing to buy heavily into UK banks.

“Royal Bank of Scotland (RBS), Barclays, Northern Rock and Lloyds TSB dominated this week’s share buys. RBS experienced particularly high trading volumes, totaling at 41% of all TD Waterhouse retail trades.  Share price in the company has slipped 5% on last week after analyst speculation that it needed to plug a £12.5bn gap in its finances.”

 

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