Britain is stuck in the global growth slow lane as Boris Johnson shows caution in ending lockdown.But the FTSE 100 is a winner from the jet-fuelled Ch
Britain is stuck in the global growth slow lane as Boris Johnson shows caution in ending lockdown.
But the FTSE 100 is a winner from the jet-fuelled Chinese investment in infrastructure.
All is forgiven for London-quoted mining giant BHP, which has overtaken Shell, BP and Unilever as the richest company in the FTSE, with a market value of £123billion.
Hot commodities: Iron ore prices have shot up 85 per cent and copper has risen 80 per cent. BHP, Rio Tinto and Glencore, all quoted in London, are benefiting
The effort by activist investor Elliott to persuade BHP to close down London and move its main listing to Sydney is unlikely to come back soon, now that it is spewing out dividends in excess of £4billion and the share price is hitting record levels.
As China’s post-Covid recovery has gathered momentum, iron ore prices have shot up 85 per cent and copper has risen 80 per cent. BHP, Rio Tinto and Glencore, all quoted in London, are benefiting.
A second wave of demand for resources is expected as Joe Biden steps up US rebuilding spend.
The strength of commodity prices makes it easier to understand how the Australian government, living the natural resources dream, is able to lock down airports and cities with little dissent.
BHP has yet to come to terms with the green agenda. In contrast, Ivan Glasenberg, who steps down as chief executive of Glencore this summer, wants to leave a different legacy.
A return to dividend payouts as commodity trading soars means a farewell cheque for him of £104million.
Glasenberg wants to be remembered for setting the mining and trading group on a carbon neutral track. He has committed to Paris carbon emission reduction targets and net zero by 2050.
And he has pledged to put an ambitious climate change agenda to a vote at the group’s annual meeting. The move even won plaudits from governance gurus at Royal London.
Coal is still a big income generator for Glencore, but rather than selling it on to an uncaring owner it is committing to running down operations with as little environmental damage as possible.
The biggest regret for Glasenberg is that a post-financial crisis debt build-up and a slump in commodity prices meant that the dream of a merger with Rio Tinto never happened.
As he retreats from the scene, Glasenberg thinks there are big deals to come for the natural resource giants, in the shape of multi-billion asset swaps as investor and public pressure builds for cleaner and more socially responsible extraction industries.
Watch this space.
FCA on rack
When Andrew Bailey, as chief executive of the Financial Conduct Authority, wrote to the Treasury Select Committee in June 2019 to announce a formal investigation into the ‘gating’ of Neil Woodford’s fund management empire, he enigmatically told MPs that he ‘cannot comment any further’. Some 20 months on and the FCA – now under the new leadership of Nikhil Rathi – has belatedly issued a bland comment.
This is unacceptable. Neil Woodford is plotting a comeback in Jersey and investors in his flagship Equity Income fund are £1billion down.
Firms in the Woodford chain of command, including authorised corporate director Link and investment platform Hargreaves Lansdown, face a slew of lawsuits. Campaigners Gina and Alan Miller have written to the select committee asking it to examine the FCA role in supervising Woodford.
The committee recently showed itself fearless in the pursuit of Bailey over his ascribed responsibility for the collapse of mini-bond firm London Capital & Finance.
Chairman Mel Stride may feel it is not the right time to challenge Bailey over the past when the Bank of England is focused on supporting economic recovery.
But there is no reason why interim FCA chief Chris Woolard and successor Rathi should not be called on to report to the committee on why the probe is taking a lifetime.
THE last time a UK pharma boss ran into trouble over pay was in 2003 when shareholders rejected a potential pay package for Glaxosmithkline’s French boss Jean-Pierre Garnier, worth up to £25million.
There will be little appetite this year to challenge another Frenchman, Pascal Soriot of Astrazeneca, over his £15.4million remuneration package. Few people have done more in the pandemic to drive the global vaccine rollout.
Oxford scientists did the hard work in the labs. It is Astra which turned the vaccine into a reality, setting up production lines across the planet.
Soriot’s pay optics may look ill-timed. But it is hard to imagine an outcry.