Monday, February 22, 2016

BHP Billiton reports $5.67bn loss; Pound tumbles to seven-year low on Brexit fears; Slowdown shows in Singapore housing market

1 BHP Billiton reports $5.67bn loss (Chris Johnston on BBC) Mining giant BHP Billiton has posted a huge half-year net loss of $5.67bn and warned that weak commodity prices will continue. The figure for the six months to December compared with a profit of $5.35bn for the same period in 2014.

Lower commodity prices slashed revenue by 37% to $15.7bn, sending underlying profit down 92% to $412m. BHP, one of the world's biggest mining companies, took the axe to the interim dividend. It has abandoned its long-held policy of maintaining or increasing dividend payments to shareholders, reducing the payout from 62 cents a share to just 16 cents.

Chairman Jac Nasser said BHP now believed the period of weaker prices and higher volatility would be prolonged. The company pledged to pay a minimum of 50% of underlying profits in dividends in the future.

Mining companies such as BHP have been under intense pressure as a slowdown in China's economy results in lower demand for key commodities, such as iron ore and coal. BHP Billiton is one of the world's largest producers of major commodities including iron ore, metallurgical coal, copper and uranium, and has substantial interests in both conventional and shale oil and gas and energy coal.

BHP was founded in the mid-1800s in Australia, while Billiton's roots can be traced back to a tin mine in Indonesia in 1851. The Anglo-Dutch company merged with BHP in 2001 to form a global mining giant. However, that merger was partly undone last year when it spun off some smaller assets into a new company called South32.

2 Pound tumbles to seven-year low on Brexit fears (Katie Allen & David Hellier in The Guardian) The pound tumbled to a seven-year low and the UK was warned its credit rating was at risk on Monday as the effect of Boris Johnson’s backing for the Brexit campaign was felt in financial markets.

However, as traders and city economists wagered that the London mayor’s intervention had raised the probability of a leave vote in June’s EU referendum, high-profile business figures threw their support behind prime minister David Cameron’s push to stay in the EU.

The bosses of some of Britain’s top companies, including easyJet, the defence contractor BAE Systems and Shell, signed a letter backing a vote to stay in Europe. The letter was signed by the heads of about a third of the businesses on the FTSE 100 index of Britain’s largest stock-market-listed companies.

Investment banks renewed warnings of the economic risks from a Brexit, predicting exports and investment would be hit. Britain’s biggest bank, HSBC, used its annual results update to warn of a “heightened risk of uncertainty” from a vote to leave the EU. Those fears were reflected in currency markets where the pound suffered its biggest one-day drop of Cameron’s premiership.

The credit ratings agency Moody’s put the government on alert that a decision to leave the EU could lead to a downgrade of the UK’s strong credit score, potentially pushing up the cost of government borrowing.

Moody’s rates the UK Aa1, one notch below the coveted top triple-A score. The agency said if the British public voted to leave the EU, it would consider assigning a “negative outlook” to that rating, compared with a “stable” outlook currently. Such a forecast would imply a greater chance of a downgrade of the Aa1 rating in the future.

3 Slowdown shows in Singapore housing sector (Rachael Boon in Straits Times) The economic slowdown and the tough leasing market led to a jump in the number of residential properties put up for auction last year, said property research house DTZ.

Listings for mortgagee sale - which is when a bank puts a property up for auction when its owner cannot service the home loan - almost doubled to 87 units from 47 in 2014. There were only nine properties under mortgagee sales in 2012, when the property market was growing.

More owners were also forced to put their properties under the hammer. Listings for owner's sale rose to 135 properties last year from 77 in 2014. DTZ also noted that more landed properties and large apartments were listed for auction last year.

DTZ said with the recent stock market sell-off, there will likely be more choice homes put on the block. Said Dr Lee Naijia, DTZ's head of SEA Research: "Sudden shocks in the equity markets tend to be a precursor for more auction listings, as owners need to adjust their financial position. This will offer prospective home buyers a window of opportunity to acquire homes at reasonable prices."

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