SFC swallows its objections with smaller Rusal board lot
So, eight months after deciding that Russian aluminium company Rusal was too risky for retail investors, the Securities and Futures Commission has in effect now conceded that its highly controversial decision to exclude retail punters was a mistake.
When Rusal listed on the Hong Kong stock exchange in January, the SFC stipulated that the company must trade in board lots of no less than HK$200,000 to discourage retail investors. The HK$200,000 rule wasn't strictly adhered to. A board lot of 24,000 required the shares to be priced at HK$8.33 and it has traded below that for up to several months without being adjusted. A board lot at yesterday's closing price would have cost HK$187,200.
However, now the SFC has decided that from October investors will be able to buy board lots of 6,000 shares. At yesterday's price this would set you back HK$46,800 which is still quite chunky.
The background to the SFC's controversial intervention was the hammering the SFC took for approving the so-called Lehman's minibonds. Asleep at the wheel, these toxic instruments slipped past the SFC as low risk investment instruments when they turned out to be high risk.
The difference between Rusal and Lehman's was that there was a 1,000-page prospectus outlining Rusal's risks together with newspaper reports virtually every week for three months discussing the risks. So, it is unlikely that anybody in Hong Kong with enough money to invest in the stock market was unaware that Rusal was risky. The same alas could not be said for the minibonds. It was a fine case of locking the stable door after the horse has bolted. The worrying question now is whether the SFC is any use in recognising genuine risks.
High-altitude lockout
The rivalry between Interros and Rusal over Norilsk Nickel reached new heights recently when Rusal chief executive Oleg Deripaska's private jet was not allowed to land at Norilsk airport for reasons that were not disclosed.
The Siberian mining town's airport just happens to be owned by Norilsk Nickel a company with which Deripaska has a somewhat uneasy relationship despite being a 25 per cent shareholder.
He was able to land the following day but was no doubt irritated. He was due to join a meeting with Russian Prime Minister Vladimir Putin to discuss the socio-economic future of the city of Norilsk which has the distinction of being the biggest city inside the Arctic Circle (population 100,000), but is also one of the 10 most polluted cities on earth.
Rusal and Interros which both own a 25 per cent stake in the nickel company have been vying for control. Putin has been reported as saying that if the two sides don't sort out their differences then he will.
Miner in name only
We see that Siberian Mining Group, which is included in the stock exchange's list of so-called "mining" companies, is considering the acquisition of an insurance agency and a broking business.
Siberian Mining has an interest in a farming venture on the mainland which has yet to get under way. Most of its revenue appears to come from a digital revenue technology service. And it recently discontinued its garment business.
It does own a Russian coal mine and has contracted a Russian mining consultant to prepare a mining plan, but this means it is still in the development stage.
Despite the name, it's a bit of a stretch to regard it as a mining company.
Buffett in another league
Seems hard to believe that the still highly influential investor Warren Buffett turned 80 this week. He is still at the height of his powers and his net worth of US$47 billion makes him the third richest man on the planet according to Forbes magazine.
His company, Berkshire Hathaway, is America's fifth largest with a market value of around US$200 billion which is exceeded only by Exxon-Mobil, Apple and Microsoft. Such is his popularity that around 40,000 Berkshire shareholders now attend the annual meeting in Omaha.
Alas, despite the reverence paid to Hong Kong's tycoons by punters and politicians, they seem to fall a long way short.
StanChart left red-faced
Standard Chartered must be wondering about the wisdom of its decision to sponsor English Premier League side Liverpool. The club is currently lying 13th in the table after finishing last season in 7th place, its worst position in 11 years.
However, Gavin Laws, Standard Chartered's group head of corporate affairs, insists: "To try to buy the airtime we got from just the opening game against Arsenal across the world would have cost me at least what we're paying for four years."
Liverpool has a ?37 million (HK$2.84 billion) loan with the Royal Bank of Scotland Group which matures on October 6. If a deal isn't secured by then, or the debt can't be rolled over, it could mean the team being run by one bank and sponsored by another.
Worse than being caught between a rock and a hard place.
