Initiating Coverage: Is Glencore Out Of the Woods Yet?



Initiating coverage

Glencore (GLNCY) has been in the news for the last couple of weeks. The company’s share price has seen huge swings over this period. The stock made a closing low of $2.07 on September 28, but then subsequently bounced back to $3.84 on October 7. Not only Glencore has seen heightened volatility in the recent weeks. Some of its peers in the mining space, including Freeport-McMoRan (FCX) and Teck Resources (TCK) have been pretty volatile as well.

Together, Glencore and Rio Tinto (RIO) form ~2.8% of the iShares MSCI United Kingdom ETF (EWU).

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Series overview

Although Glencore’s stock has recovered somewhat, as can be seen in the graph above, investors are left wondering whether they have seen the worst or if there’s further downside risk for the mining giant.

Mining companies have come under pressure due to falling commodity prices. To add to the woes, some companies have surging debt, most of which has been taken on to cater the rising Chinese appetite. Now, with the Chinese economy set to grow at the slowest pace in over a quarter of a century, mining companies are in a fix.

In this series, we’ll present Glencore’s complete business overview. We’ll look at the company’s key businesses and explore its financial standing. Later in this series, we’ll also look at Glencore’s leverage ratios. This series should help you understand how Glencore could play out in the coming months. In the next part, we’ll begin by learning more about Glencore.


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