Swiss mining giant Glencore reveals plan to end secondary Hong Kong listing in January

Investors with shares in Hong Kong will be able to transfer and trade them in London

PUBLISHED : Tuesday, 31 October, 2017, 11:40am
UPDATED : Wednesday, 01 November, 2017, 12:00am

Glencore, the Swiss mining and trading giant, plans to cancel its secondary listing in Hong Kong amid a lack of interest from investors.

Since the company first listed in the city in May 2011, only a small number of shareholders have elected to hold their shares in Hong Kong, preferring Glencore’s main listing in London. Only about 0.3 per cent of the company’s total issued share capital is held in Hong Kong, according to a filing with the Hong Kong stock exchange.

“After careful consideration, the board has concluded that it is in the best interests of the company, the shareholders and holders of other securities of the company as a whole, if the listing of shares on the HKEX is withdrawn,” said Tony Hayward, the company’s chairman.

The withdrawal is expected to be effective from January 31, 2018 with dealings in Glencore shares to cease on January 10.

Glencore will continue to be listed on the London Stock Exchange and the Johannesburg Stock Exchange, its other secondary listing, and shareholders who previously held shares in Hong Kong will be able to transfer and trade them in London.

Hong Kong has been stepping up efforts to expand its commodities business, especially as it seeks more trade links with China. In 2012, the Hong Kong stock exchange bought the London Metal Exchange. In May, it was approved the set up of a commodities platform in Shenzhen’s Qianhai New District commercial area, although it may be more than a year before this operation takes shape.

But Glencore’s decision underscores expectations that trading turnover is likely to be boosted on the London Stock Exchange, where more commodity companies are listed and which offer a wider variety of commodity-related financial products than Hong Kong.

“Hong Kong’s commodity trading isn’t big. Glencore’s trading can be boosted in London, because investors are concentrated there for commodity trading and for futures trading,” said Linus Yip Sheung-chi, the chief strategist at First Shanghai Securities.

“Generally speaking, listings and voluntary delistings are the result of commercial decisions by companies and are often due to many factors,” said a Hong Kong Exchanges and Clearing (HKEX) spokesperson, adding that it does not comment on individual companies.

“Hong Kong is one of the world’s leading international financial centres and HKEX’s stock market is widely recognised as a very efficient market for capital raising as well as trading and investing in Hong Kong, mainland and international-related securities across many sectors.”

Glencore shares in Hong Kong rose to HK$39.95 on October 16, their highest level since November 2014, before trading at the current level of HK$37.95.

On Monday, the company raised its marketing division’s full-year earnings before interest and tax (ebit) for a third time this year, to between US$2.6 billion and US$2.8 billion, reflecting higher raw material prices, from between US$2.4 billion and US$2.7 billion, previously.

Glencore also said its own-sourced zinc production was at 827,400 tonnes in the third quarter, 5 per cent up on the comparable 2016 period, and its own-sourced copper production was at 946,500 tonnes in the third quarter, 11 per cent lower than the comparable 2016 period.