BHP Shares On All Time High

Submitted by Craig Strzelecki on 17 May, 2008 - 11:11

BHP shares have hit record high at all the major stock exchanges including ASX and NY Stock exchange. BHP Billiton witnessed a jump of nearly 4 percent after rumours hit the market about undisclosed Chinese interests to hold stakes in the company. The intraday trading of shares witnessed a surge of $50 today amidst strong speculations. BHP Billiton shares opened 4 percent higher at $49.95 before reclining back $1.56 or 3.25 percent at $49.54 by 10 am.

Rumours have been strong on the market that unidentified Chinese company is interested to ally with one of the major Australian Pension and investment fund to hold 9 percent stake in the company. The Chinese would take half the stake and remaining would be divided between the investment fund and private equity investor. However, the Chinese would have the privileges to purchase the stakes from the fund in next five years at a settled price.

This division has been planned to avoid increasing sensitivity in Canberra regarding the moves on Australia’s natural resources by Chinese owned business entities. There have been clear indications earlier that the Chinese are interested in holding more stakes in Australian resources. If the Chinese own the complete 9 percent, then they might be blocked on the grounds of national interests of the country. If the Chinese hold less than 5 percent stakes, it would become hard for Wayne Swan to block such a deal. However, the Chinese would have option to buy back the 4.5 percent shares in next 5 years.

Rumors regarding Rio Tinto’s largest shareholder, Chinalco, a Chinese state owned aluminium giant, was preparing to buy stakes in rival company. Earlier in February, Chinalco had teamed up with US based aluminium producer, Alcoa to grab 9 percent interest in Rio Tinto for nearly $14 billion. BHP chief, Marius Kloppers, had also confirmed earlier this month that he had no doubts that Chinese would purchase his company shares in coming times.

China has been experiencing a dip in their profit margins as the commodity prices in the international markets have been escalating. This has prompted nation’s companies to seek overseas acquisitions. The Australian fund is also contemplating about investing such a big amount as it is a very politically sensitive issue. The money for this funding comes from superannuation of public servants and state government entities.