The commodities giant - Glencore halted its stock trading in Hong Kong. Glencore is the world’s largest publicly traded commodity supplier. Glencore will probably announce the plans to cut net debt of about $30bn.Prices of both copper and coal two most improtant products of the company fell recently to six-year lows. The stock slumped more than 50% since early May as investors worry about China’s slowdown (China is the world’s top metals consumer). However the stock surged 6.6% on Thursday alone so something might have changed.
In August, the firm reported a first-half loss of $676m after being hit by falling oil and metal prices. Ratings agency Standard & Poor’s said last week it might lower Glencore’s credit rating if the giant did not reduce its debt.
Source: Bloomberg, Glencore & Copper prices
Is Glencore already a buying opportunity? Glencore has not dicided to cut its dividend yet however such a move is largely priced in. Thomson Reuters data shows Glencore trades at 7.3 times its 12-month forward earnings, against 12.7 times for the STOXX Europe 600 Basic Resources Index.
Its dividend yield is about 9 percent, against an average of 4 percent for its peers. According to Thomson Reuters data, Glencore’s debt to equity ratio is currently at nearly 110 percent, against 54 percent for Rio Tinto and 39 percent for Antofagasta.However some investors recommend to wait. Lorne Baring, managing director of B Capital Wealth Management, said that "Investors should avoid their exposure to commodity players like Glencore. The P/E ratios might dramatically change in the next guidance by analysts and the stock may look expensive again. Dividends are also unlikely to be maintained".