So Glenn Stevens likes the nags after all.
Well, sort of.
Even by the standards of the recent financial crisis, Thursday’s sell-off in stock markets was sizeable, the FT says. The growing nervousness over the debt crisis in Europe, the risk of a “double-dip” recession in America and a view among investors that policymakers, including the Japanese government and European Central Bank, had failed to shore up confidence accelerated this week’s sell-off. The worst hit stocks were those of the world’s big natural resources groups, including miners, oil companies and traders. Despite the prices of many commodities remaining near recent highs, their shares prices tumbled, sending valuations to the lowest levels of the year. Even gold started selling off like any other risky asset on Thursday, reports the WSJ. In Sydney on Friday, resources stocks continued to be pounded with BHP Billiton off 4.1 per cent and Fortescue Metals Group down 6 per cent.
The London Stock Exchange does not have a great track record of consummating deals (remember the proposed Deutsche Borse transaction of the 2001?) or grabbing big strategic opportunities.
Global spending on mining, energy resources and commodities will surpass pre-crisis levels next year, according to an emerging industry consensus, indicating rising confidence in an economic recovery led by China and other fast-growing markets, reports the FT. The boom in capital expenditures, across oil, natural gas and agribusinesses, comes as prices jump for commodities such as copper, iron ore, crude oil and wheat. It also raises the prospect of short-term bottlenecks in the already stretched supply of equipment and services, and project delays as costs rise. Global mining expenditure is set to hit a record $115bn-$120bn next year, above the peak of $110bn set in 2008, according to a survey of industry executives and consultants.
Global miner Xstrata threatened on Thursday to scrap $5.4bn in coal and copper projects in Australia, blaming Canberra’s new 40% resources profits tax and bringing to more than $20bn the value of shelved new developments, reports Reuters. Xstrata, which last month halted some copper exploration in Queensland, said it was also suspending A$586m ($496m) of spending on its Wandoan thermal coal project and also a A$600m expansion of its Ernest Henry copper mine.