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”.
Subscribe to 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”.
-
8 of the best converted properties for sale nowThe best converted properties for sale – from an apartment in the former Hartley’s Jam factory on London’s Southbank, to a converted 18th-century mill in Itteringham, Norfolk
-
How taking a two-year career break could leave a £26k hole in your pensionCareer breaks are increasingly common but it is important to take steps to protect your pension, as gaps compound over time
-
Will Comstock crash – or soar?Opinion The upside for Comstock, a solar panel-recycling and biomass-refining group, dwarfs the downside, says Dominic Frisby.
-
'As AGMs go digital, firms must offer a new form of scrutiny for shareholders'Opinion Technology has rendered big AGM meet-ups obsolete, but the board still needs to be held to account, says Matthew Lynn
-
Unilever braces for inflation amid tariff uncertainty – what does it mean for investors?Consumer-goods giant Unilever has made steady progress simplifying its operations. Will tariffs now cause turbulence?
-
Two ways to tap into monopoly profits from airportsMost investors can’t get their hands on airports. Here are two ways you can
-
Fat profits: should you invest in weight-loss drugs?The latest weight-loss treatments could transform public health and the world economy. Should you invest?
-
How investors could profit from Ramsden Holdings' four-part growth strategyRamsdens Holdings offers a diversified set of financial and retail services and a juicy yield, says Dr Michael Tubbs
-
How to invest in the booming insurance marketThe insurance sector is experiencing rapid growth after years of stagnation. Smart investors should buy in now, says Rupert Hargreaves
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
