News

November 16, 2008

That Was The Week That Was … In London

By Our London Correspondent

In London what started as a relatively strong week ended up badly with all ten of the FTSE 100 miners closing down. Most of the significant falls came on Friday in reaction to sharp falls in commodity prices as the market took on board the fact that off-take volumes for most commodities seem to have completely collapsed. Rio Tinto’s (LSE: RIO) decision to postpone its next investor briefing only served to underline the fact that we are living in very uncertain times. Given that, Rio Tinto did well to end the week as the best of the large cap miners with a net fall of only two per cent, whereas the worst performer, Vedanta (LSE: VED), gave up almost 27 per cent for no obvious reason other than that it is particularly exposed to India where demand growth is seen to be vulnerable.

The junior miners fell an average of 7.5 per cent. As has become the norm, most of the losses were taken by the larger and more liquid stocks. Indeed, for most of the very small companies liquidity has completely evaporated and so the quoted prices are almost meaningless. Spreads of more than 50 per cent are commonplace.

The market is now focussing on picking out the probable survivor companies from those that will go to the wall when their cash runs out. Indeed, one of the more positive...