Rio Tinto Group

Lai See

PUBLISHED : Saturday, 14 February, 2009, 12:00am
UPDATED : Saturday, 14 February, 2009, 12:00am


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Chinalco's love for Rio written in stars, but will romance last?

Can it just be coincidence that Chinalco's infatuation with Rio Tinto seems to coincide with Valentine's Day?

It was around this time last year that Chinalco teamed up with fellow aluminium giant Alcoa to buy a 9 per cent stake in the world's third-largest miner for US$14 billion.

This year, the mainland suitor is offering almost US$20 billion to double its stake and take a slice of nine of Rio Tinto's mining operations around the globe.

The relationship is written in the stars - at least that's what the bankers involved hoped when they codenamed Chinalco 'Cancer' and Rio Tinto 'Scorpio' while the deal was first being put together last year.

According to astrologers, the two star signs are a perfect match for a long-lasting relationship. 'Cancer makes Scorpio feels secure' and 'together they will feel loved and safe'.

However, that has not exactly been the case in the first year of their 'marriage'. Shares of Rio Tinto have tumbled steadily from A$128 on February 13 last year to yesterday's closing of A$51 (HK$261.72), meaning Chinalco has lost more than half of its investment on paper.

And this week, despite Chinalco proposing to buy Rio Tinto convertible bonds at a premium and offering a price for the mines that is better than the market's expectation, the approach has failed to please some Rio Tinto shareholders, who think the mainland firm is stealing a deal and diluting their stakes.

So what does the future hold? Referring to the horoscope again, it says: 'Cancer is clinging and insecure, while Scorpio offers the strength and protectiveness Cancer is looking for. In turn, Cancer is loving, generous, devoted - all that Scorpio wants.'

All very touching, but we reckon the jury's still out on whether this will turn out to be a match made in heaven.

Food fills in for missing roses

The financial crisis shouldn't be taking all the blame for the big drop in sales of roses for Valentine's Day.

Yes, it has been noticeable that fewer bouquets than usual have been delivered to office reception desks this year.

But the fact that Valentine's Day falls on a Saturday, a day off for most workers, must have prompted many a lovestruck male to save on the flowers bill this year. After all, it's not just about the giving but also about the show, the recognition and the admiration - or envy - of co-workers.

While florists have surely suffered, restaurants have been reporting increased bookings for a dinner for two, especially the Michelin-starred establishments that were fully booked for tonight more than a week ago.

We can probably expect the same sort of shift from flowers to food next year, when Valentine's Day falls on a Sunday.

Sales gimmick to beat

We have read of a women's clothing retailer in the United States giving 20 per cent off all online purchases to shoppers who share stories about their worst Valentine's Day gift in 100 words or less.

There's also a lingerie chain offering a free box of chocolates for purchases of more than a certain amount. And a dotcom florist is promoting a 'Valentine's Stimulus Package' of 25 per cent off all orders placed before February 12.

But the advertising gimmick that most reflects these economically stringent times comes from IPAC Financial Planning Hong Kong in the form of an e-mail message that read:

This Valentine's Day don't be disappointed I didn't get you a rose.

I thought I would invest the money instead.

And, with the power of compound interest,

One Valentine's Day 20 years from now

I will give you ... a rose garden.

A perfect case of hedging your bets.

Words of wisdom

The quote of the week comes from shareholder activist David Webb on the Hong Kong stock exchange's decision to water down the new regulations governing the share trading blackout period for company executives.

Voicing his disappointment, he said it 'clearly undermines any claims to being an international financial centre.

'If we don't raise our game, money will go elsewhere.'