News Wrap

IN THIS morning’s wrap: Stokes moves to avert Caterpillar crawl in China; bankers nervous over funds in Xstrata merger; and BlackRock says supply gap presents good opportunities.
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Courtesy, WesTrac

Lou Caruana

Stokes moves to avert Caterpillar crawl in China

The economic slowdown in China has forced Seven Group Holdings to review its Caterpillar business in the region, which is expected to lead to extensive cost cutting to realign expenses with declining revenue, according to the Sydney Morning Herald.

The company will also review the Coates Hire business it co-owns with private equity firm the Carlyle Group to explore ''ownership alternatives''.

Seven executive chairman Kerry Stokes told the annual meeting in Sydney that it had been a challenging year for WesTrac in China and ''we are currently working to ensure that our cost base there reflects this lower level of demand''.

Bankers nervous over funds in Xstrata merger

Bankers working on Glencore's mega-merger with Xstrata have launched a frantic "get out the vote" operation focused on hedge funds as the final deadline on the deal approaches.

Although they believe the $US85 billion merger has strong support, bankers are worried the complexities of the voting structure and anger over 144 million pounds in bonuses for Xstrata staff could topple it at the last minute after 10 months of negotiations.

Supply gap presents good opportunities

The world’s biggest resources funds manager BlackRock says supply challenges mean prices for commodities like copper, aluminium and nickel could spike even as China’s growth slows, according to the Australian Financial Review.

BlackRock natural resources equities chief investment officer Evy Hambro said the looming prospect of a supply shortfall presented good investment opportunities.

“Current mines cannot hope to meet global demand after 2015, opening up supply gaps for many metals – and investment opportunities,” Hambro said in a report.