A successful takeover of Anglo American Plc under the arrangements BHP Group has offered could lead to outflows of $4.3 billion from South Africa, according to a JPMorgan Chase & Co analysis.
The deal, proposed by BHP and rejected by Anglo, would involve Anglo distributing its holdings in its South African iron ore and platinum units to shareholders. That, according to JPMorgan’s South African mining analyst Catherine Cunningham, would lead to developed-market investor index funds selling the unbundled stocks, resulting in the outflow.
“There is now a materially higher probability that BHP will reach an agreed deal,” she wrote in the 23 May note to clients. “We see downside risk to the share prices of both Amplats and Kumba.”According to her analysis, developed-market funds would sell $9.4 billion in stock and $5.1 billion would be bought by emerging-market investors, resulting in the net outflow. JPMorgan estimated the index fund holdings in Anglo American based on publicly available data.
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