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FTSE 100 slumps: Anglo American plc shares under-perform as investors are advised to Hold back on the mining giant

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Category: The FTSE 100 Live - The Heart-Beat of the FTSE 100

Published on Thursday, 20 September 2012 08:15

The FTSE 100 (INDEXFTSE:UKX) is 0.73 pct lower than at last night's close; the UKs leading stock index is at 5,845.74 at 9AM in London.

"The lacklustre response to the BoJ’s asset-purchasing programme baffled some investors yesterday as many investors expected a rally similar to that which followed the US Federal Reserves announcement last week. The $126Bn stimulus package announced by the Bank of Japan is the 3rd stimulus package in recent weeks, highlighting official’s concern over global economic performance. Inflation fears are now back on the table, causing some concern to investors," says Simon Furlong at spread betting company Spreadex.

Also weighing on investor sentiment were issues concerning China.

Firstly, "the widely watched HSBC Flash manufacturing index for China showed only a very modest improvement indicating that the recent slowdown might be intensifying in the months to come," says Markus Huber at ETX Capital.

Secondly, the tensions between China and Japan concerning disputed islands are also a concern; the issue just won't lie down.

Corporate action: Hold Anglo American stock

Anglo American Plc (LON:AAL) is under-performing the FTSE 100 this morning; at 9:10 we see Anglo shares are 3.37 pct in the red at 1,965.

Anglo American shares have been dealt a heavy blow by miners’ protests in South Africa and a fall in commodity prices.

Risks associated with the country have increased spectacularly but a substantial amount of gloom was already priced in.

Anglo American produces iron ore, manganese, metallurgical and thermal coal, as well as base metals such as copper and nickel.

It is a global leader in platinum and diamonds.

But, do Anglo American shares have a lot of negative action factored in?

"Indeed, mining analysts at Australia’s Macquarie Bank have said that the company was one of its top sector picks over the next 12 months alongside Antofagasta and Rio Tinto. Questor agrees that the shares look cheap – trading on a current year earnings multiple of 10.6. They are, however, 23 per cent lower than when Questor last said buy in February. Until the situation become clearer, hold," the Telegraph says.