Investors have turned their noses up at Thungela Resources, the London-and-Johannesburg-listed South African coal business spun out of Anglo American. Its shares slumped from 150p to 113p on its first day of trading in London on Monday, says Neil Hume in the Financial Times.
One problem was that many big funds cannot hold Thungela because it has a market cap of only £150m, and is thus too small to meet their investment mandates. However, the flop also suggests that markets are only approaching coal stocks with “an extremely long barge pole”, says Ed Cropley on Breakingviews. Nevertheless, despite its poor reputation, coal could have “a long future”, as some analysts reckon it will still comprise 31% of global power generation in 2030, thanks chiefly to South Asian economies “being slow to switch to green energy”.
What’s more, with “minimal investment” in new mines, there’s even an argument that supply “will shrink faster than demand, pushing prices up”. Either way, for companies such as Thungela and larger rival Glencore, there’s another “decade or more of money to be made”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Not so fast, says Oliver Gill in The Daily Telegraph. Anglo-American estimated prior to the float that the company was worth around £500m. However, “secretive research outfit” Boatman Capital says that Anglo’s valuation was not only based on an “over-optimistic forecast of coal prices”, but also ignored a “slew of additional costs”, especially those related to the clean-up of the mines. Their conclusion? The value of Thungela Resources is “zero”.
-
How to achieve a secure retirement, as more retirees admit to struggling with debtTwenty-six percent of retirees now have unsecured debt – a sharp rise compared to two years ago – with many underestimating how much a typical retirement costs
-
The key October self-assessment tax return deadlines to remember so you can avoid a shock billThere are two important dates for self-assessment taxpayers to remember in October
-
Small UK industrial stocks are hidden gemsOpinion Ed Wielechowski of the Odyssean Investment Trust highlights three of his favourite British small-cap industrial stocks
-
Aurora Innovation is running on empty – is it overvalued?Aurora Innovation, a maker of self-driving trucks, may have promised far more than it can deliver
-
'Ride the recovery in emerging markets': Gustavo Medeiros of Ashmore Group tells MoneyWeekInterview What's the outlook for emerging markets? Gustavo Medeiros, head of research at Ashmore Group, gives his analysis and reviews progress in developing economies
-
What is the Enterprise Investment Scheme and should you have one?The Enterprise Investment Scheme is tax-efficient and potentially lucrative. Taking a chance on the scheme could trim your family’s IHT bill, says David Prosser
-
The alcohol industry is suffering as consumers sober up – is it still worth investing in the sector?Changing consumer tastes are rocking the alcohol industry, but the best players are adapting their strategies. Buy them while their shares are still cheap
-
A strange calm in creditCorporate bond markets remain remarkably relaxed, with yields that offer little compensation for risks
-
'The City's big bet on green finance fails to pay out'Opinion Insurers and banks are backing away from “green finance”, and there is not much sign of the green boom we were promised. That’s a problem for the City
-
Six top investment trusts for smaller stocksLiquidity constraints mean investment trusts are best placed to seize the juiciest opportunities
