John Waples, city editor of The Sunday Times, said in his weekly column yesterday that much to his surprise, mining had performed worse than banks in the last 3 months. Names who spring to mind are Rio Tinto's UK listing, BHP Billiton (also UK listing), Xstrata and Lonmin.
Rio Tinto currently has 2.13% of its Market Cap out on loan to short sellers (%MCOL), a relatively small amount. This figure has decreased from 14% at the beginning of the year. Lonmin was also in the news last week after its suspected deal with Xstrata which eventually collapsed on October 1st. At this point, short sellers increased their positions in Lonmin significantly, when the %MCOL rose from 3% to 11.5% by October 6th. Since then these positions have been covered and Lonmin's %MCOL stands at 8% as of c.o.business on Thursday. Xstrata is an interesting stock is Xstrata, because although the price continues to fall, short interest has remained low at under 2% over the past two years. BHP Billiton has just 1.59% MCOL.
Our DESLI global mining sector, part of one of our brand new products; looks at inventory and loan movements throughout the global securities lending market. We can see that since the beginning of September that inventory has come off slightly but the loan index after an initial peak above a level of 140, has come off to just below 110 during recent days. It will be interesting to see if that trend continues. Please click here to learn more about DESLI.
Please see the graph below of Lonmin's %MCOL - you can see the increase in short positions when the failed bid was announced.
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