Here’s what’s down, and going down, in Asia today:
Rio Tinto shares are down 12.2% on a growing sense its nearly $20 billion proposed alliance with Chinalco isn’t feasible and the miner will ultimately have a mega-rights issue to raise the money it needs. Scuttling the Chinalco pact would be an embarrassment to the Chinese company, and to Rio’s leadership. Have a look at DJN’s story: “Rio Tinto Shares Fall On Speculation On Chinalco Deal”
Also down: A slew of commodities in China. Check out DJN’s story, by Chuin-Wei Yap: “Rout In China Commodities Complex Led By Oversupply Concerns.” In essence, “Chinese demand is coming back,” as Chuin-Wei writes, “but the flood of supply threatens to overwhelm it.” Base metals, steel, rubber and agricultural futurse are all trading down.
Likewise, Asian stock markets are down. Investors are, wisely, reassessing. The U.S. economy is still very sick. China’s economy isn’t staging a rocket-propelled rebound. We’re in the thick of a serious downturn, and only the most selective share-buying makes sense.
Here’s something that’s going down (in the sense of happening): China Construction Bank is starting to explain what happened with those shares Bank of America disposed of earlier this week. That process was opaque, to say the least, as the troubled U.S. bank sold more than $7 billion in CCB shares as part of its bailout/fund-raising efforts. Still unclear is which of the buyers – a group including China Life, Temasek, Hupo and BOCI – subsequently re-sold some or all of the CCB shares they had just acquired. We know some quickly flipped their newfound CCB holdings because two unnamed sellers were in the market yesterday. (Temasek is the Singapore sovereign wealth fund, Hupo is an investment fund with ties to Goldman Sachs and Temasek.)