- Stock volatility highest since Sept. 10 as shares decline
- BHP stock declines 24% in 2016 to the lowest in 11 years
BHP Billiton Ltd., the world’s biggest mining company, is suffering the same investor angst that’s beset rivals such as Glencore Plc and Anglo American Plc in recent months.
A measure of volatility over 10 days on BHP’s London stock jumped to the highest since Sept. 10 on Wednesday. The stock tumbled 7.4 percent in London trading to its lowest in 11 years, extending its decline this year to 24 percent amid mounting speculation it will cut its dividend next month.
BHP’s drop this year has outpaced declines by Glencore and Rio Tinto Group in London. Anglo American and Glencore were the two worst performers on the U.K.’s FTSE 100 Index last year, tumbling 75 percent and 70 percent respectively. BHP dropped 41 percent.
The Bloomberg Commodity Index, a measure of returns for 22 raw materials, is at the lowest since at least 1991. The Bloomberg World Mining Index of 80 stocks slumped to the weakest since 2003 as fears of slower economic growth in China and a slump in oil prices fueled a fresh bout of selling.
Plunging prices for the four major commodities BHP produces -- iron ore, copper, oil and coal -- are eroding profits. The Melbourne-based company trimmed its full-year iron-ore production forecast 4 percent today. Investec Plc shifted its rating on the company, advising investors to sell, citing a looming dividend cut.
“We have taken the view that BHP Billiton will need to reduce its progressive dividend policy on a permanent basis,” Investec analysts Hunter Hillcoat, Marc Elliott and Jeremy Wrathall wrote in a report, citing “prevailing financial risks” of the fallout from a Brazilian dam breach that’s killed at least 17 people and lower oil prices. “We expect exceptionally low prices to prevail until excess supply is forced out of the market and balance returned.”
A spokesman for BHP declined to comment.