StockBeat: Rio Tinto – No Country for Old Shareholders By Investing.com


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By Geoffrey Smith 

Investing.com — The ESG juggernaut has claimed arguably its highest-profile victim yet.

Rio Tinto (NYSE:) chief executive Jean-Sebastien Jacques has been forced out after weeks of pressure from institutional shareholders in the wake of Rio’s destruction of a unique complex of prehistoric caves in the Pilbara region of western Australia.

Two other senior executives, iron ore head Chris Salisbury and corporate relations chief Simone Niven, will also leave, creating an awkward vacuum at the top of the division that makes most of Rio’s money. Rio shares, which have held up well enough throughout the furore, rose another 1.2% by mid-morning on Friday.

It’s a staggering fall from grace for the French-born Briton, who had made Rio one of the best-performing mining stocks in the world over the last three years, and a salutary lesson to any modern-day CEO who dares to under-estimate the importance of non-financial performance in today’s business.

ESG-themed investing (Environmental, Social and Governance) is a growing force in the developed world, reflecting the increased importance that (comfortably well-off) investors now put on issues of sustainability. 

In Europe in particular, inflows into ESG-themed funds have surged as a new generation of investors has flocked to the asset class. They accounted for a third of all European fund sales in the second quarter, according to Morningstar. The trend has been one of the factors behind the spectacular outperformance of renewable energy stocks vis-à-vis Big Oil this year.

Indeed, in a world where actively-managed funds are constantly losing market share to algorithm-driven ETFs, ESG-themed funds are one of the few remaining selling points for asset managers, a rare area where they still have a persuasive argument for their higher management fees.

Typically, it’s companies’ performance on the E (for Environmental) element that has garnered the most attention from investors so far. Indeed, part of the reason that Rio finds itself in many ESG portfolios is Jacques’ decision to sell off the company’s thermal coal assets due to coal’s role in driving climate change.

Unfortunately, though, the company took its eye off the S (for Social) part. The Juukan Gorge caves were a site of extraordinary archaeological interest, showing evidence of continued human habitation over 45,000 years ago (before the last Ice Age). By comparison, even sites such as Stonehenge look about as old as a Dubai skyscraper.

That alone ought to have been enough to stop Rio dynamiting them as part of its plans to expand a major iron ore mine.

What made it worse was that the direct descendants of those cave-dwellers – the Puutu Kunti Kurrama and Pinikura Aborigines – still live in the region and had lobbied intensively for the caves’ preservation.  The controversy was thus sharpened many times over by the controversial politics of Australia’s relations with its First Nations. To paraphrase Tommy Lee Jones’s sheriff in No Country for Old Men, if it ain’t a mess, it’ll do until the mess gets here.

The company’s protestations that they had acquired all the necessary legal approvals for the step are factually correct, but morally hollow. Big Mining’s power over such processes has been documented too many times for that excuse to hold much weight.

For better or worse, past generations of shareholders have accepted that reality for decades. Today’s generation, through the intermediation of asset managers desperate not to lose ESG mandates, is made of different stuff.  





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Nissan Raises $8 Billion Through Dollar Bonds Issuance, but Long Road to Recovery By Investing.com


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By Gina Lee

Investing.com – Yokohama-based Nissan (OTC:) Motor Co., Ltd. (T:) has raised $8 billion via its first non-convertible dollar bond sale in at least two decades.

Nissan’s Tokyo shares were down 0.60% to JPY413.5 ($3.90) by 12:27 AM ET (5:27 AM GMT).

The deal, one of the biggest ever in Asia, saw Nissan split the sale into four parts, with a public euro note reportedly due to debut later in the day. It has already priced JPY70 billion ($659.49 million) worth of notes in its home market in July, as well as securing financial backing from the Development Bank of Japan.

Although it has sufficient liquidity, the fundraising followed Nissan’s decision to further strengthen its finances as the company is undertaking business structural reforms, company spokeswoman Azusa Momose told Bloomberg. Access to a broad base of investors is also important, she said.

The Japanese company’s offering adds to record dollar bond sales from Asian issuers this year. As companies look to load up on cash, a broader recovery in global credit markets has also been boosted by March’s monetary stimulus.

With COVID-19 impacting demand, Nissan has been forced to cut jobs and capacity alongside attempts to revive its aging lineup and improve margins. The company forecasts a JPY470 billion ($4.43 billion) operating loss for the current fiscal year after recording its biggest loss in around 20 years.

The company has seen its reputation take a hit since former chairman Carlos Ghosn’s arrest in 2018, which also saw S&P Global Ratings cut Nissan’s credit score to just one level above junk in July.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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IAG’s Cash Call Falls Flat, Saga Sags By Investing.com


© Reuters.

By Geoffrey Smith 

Investing.com — Another day, another sign of the travel industry struggling to escape the clutches of Covid-19.

International Airlines Group (LON:), the parent of British Airways, Iberia, Aer Lingus and Vueling, has had to price its 2.7 billion euro capital raise at a 36% discount to the reference price, a stark illustration of how hard it’s getting to persuade private investors to put capital into an industry which can struggle to make sustainable profits in the best of times.

IAG became the latest big airline group on Thursday to revise down its outlook for the fourth quarter of this year saying it now expects Available Seat Kilometers, a key metric of capacity, to be down 60% from year-earlier levels, rather than the previously expected 46% drop. For 2021, it revised its forecasts for ASKs to 27% below 2019 levels, from a previous estimated drop of 24%.

“Since July, IAG has experienced an overall levelling off of bookings,” the group said in a statement. “Short-haul bookings have fallen slightly following the re-implementation of quarantine requirements by the U.K. and other European governments for travellers returning from specific countries including Spain.”

The most optimistic thing it could say was that its more lucrative long-haul business has registered a “modest increase” since August, and that “where travel markets have reopened without border restrictions and quarantine requirements, IAG has been encouraged by the level of pent-up demand that exists for air travel.”

IAG shares fell 3.8% to a three-week low in response, underperforming both the and the . They weren’t helped by some unfortunate-sounding lobbying from the International Air Travel Association, which warned that the U.K. aviation industry, the backbone of IAG’s business, is in existential crisis.

“Without a rescue plan, 820,000 jobs will be vaporized by quarantine and they may never come back,” IATA said in a statement that called for a new airport testing regime, a suspension of Air Passenger Duty and the extension of the government’s furlough scheme “until border restrictions are lifted and the industry has a chance to recover.”

IAG does at least expect to break even on an operating cash flow level even under its new assumptions. However, it warned that it still expects that passenger demand will return to 2019 levels no earlier than 2023.

IAG wasn’t the only travel group scrambling to raise money on Thursday. UK-based Saga (LON:), which specializes in selling holidays and insurance to the over-50s, said it will try to raise 150 million pounds to plug the holes in its balance sheet made by the pandemic.  The company swung to a pretax loss of 55 million pounds in the six months through July, sending net debt (excluding its cruise business) to 3.6 times EBITDA.

Saga shares had already lost nearly 70% year-to-date before the announcement and fell another 5.4% in the wake of it.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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3 Things to Watch for September 10 By Investing.com



By Liz Moyer

Investing.com — Wall Street staged a rally on Wednesday, partially reversing a sharp drop in big tech stocks over the last few sessions.

Apple Inc (NASDAQ:) and Tesla Inc (NASDAQ:) rebounded as did FANG stocks Microsoft Corporation (NASDAQ:), Amazon.com Inc (NASDAQ:), Alphabet (NASDAQ:) Inc Class C (NASDAQ:) and Facebook Inc (NASDAQ:).

gained back 2.7% after dropping 10% in the last week after hitting an all-time high. Still, the tech-heavy index is up 24% this year. Some analysts said the pullback might represent necessary pause as investors digest market news rather than the beginning of a new dotcom bust. Time will tell.

Thursday will feature jobs and other economic data that could provide clues on the pace of the economic recovery. Already, data on showed an increase in July, especially in retail, though the numbers also indicated more people were quitting jobs.

Jobless claims and oil inventory readings are due out in the morning, and earnings are due out from Peloton and Oracle.

Here are three things that could move markets tomorrow:

1. Jobless claims seen falling again

The weekly report on comes out at 8:30 AM ET (1230 GMT). Analysts tracked by Investing.com expect 846,000, down from 881,000 the previous week. And , which come out at the same time, are expected to number 12.9 million, down from 13.2 million the previous week.

The downward trickle of new and continuing claims is a positive sign that the economy is coming back from the Covid-19 lockdowns, but there is still plenty of room for improvement, with the four-week jobless claims average running just under 1 million and a new pandemic economic relief program stalled in Congress.

2. Oil inventory expected to drop

The government’s data for last week is due out at 11:00 AM ET (1500 GMT). Stockpiles have been declining for weeks despite disruptions like Hurricane Laura, which ripped through the Gulf Coast last month.

Analysts tracked by Investing.com are expecting crude inventory to drop 1.3 million barrels after a draw of 9.4 million barrels the previous week. Oil stored at the , Oklahoma, facility is expected to increase 391,000 barrels after a build of 110,000 the previous week. stocks are expected to decline 2.4 million barrels, after a draw of 4.3 million the previous week.

3. Earnings from two companies that are seen benefiting from lockdowns

On the earnings front, stay-at-home exercise cult favorite Peloton Interactive Inc (NASDAQ:) is expected to report profit of 9 cents a share on revenue of $580 million. The company benefitted from the pandemic shutdown of gyms across the U.S. and is expected to continue to grow despite gym reopenings this fall. On Tuesday, it even announced new, cheaper equipment and different pricing models.

Oracle Corporation (NYSE:)also reports earnings, with profits expected to come in at 86 cents a share on revenue of more than $9 billion. Demand for cloud infrastructure services is expected to boost sales as companies and students adapted to stay-at-home working and learning. For example, pandemic star Zoom Video uses Oracle’s cloud infrastructure services for its popular video conferencing service, according to Yahoo Finance.

 





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Lululemon’s Transparency Talk Tanks Shares Despite Solid Sales By Investing.com


© Reuters.

By Christiana Sciaudone

Investing.com —  Transparency hasn’t been kind to Lululemon Athletica Inc (NASDAQ:).

The popular retailer of yoga pants and other athletic attire smashed through analyst expectations for its quarterly results, but a cautious tone by the head of the company during the earnings conference call this week prompted a sell-off in the shares, which tumbled 10% on Wednesday. 

“I’d like to reiterate that we are cautiously optimistic with regard to the holiday season,” said Chief Executive Officer Calvin McDonald during the earnings call. “Our starting point is that the environment remains uncertain. COVID is not yet contained in many of the markets where we operate, and while we expect the recovery to advance, we continue to plan for multiple scenarios this fall and particularly for the holiday season.”  

Lulu has navigated through tricky situations before. In 2013, the company was forced to recall pants for being made with see-through fabric. That was followed by founder Chip Wilson placing the blame for the transparent pants on women’s bodies. Those comments helped lead to his departure from the company.

Lululemon reported earnings per share of 74 cents compared to the expected 54 cents on sales of $902.94 million, versus the estimated $842.31 million. 

Peer American Eagle (NYSE:) also reported stellar results, with a loss per share of 8 cents compared to the expected loss of 17 cents, on sales of $884 million versus the estimated $808.77 million. 

Sales were supported by the Aerie brand, which makes activewear, apparel and intimates. 

“In the midst of an unprecedented crisis, we delivered a significant improvement from the first quarter throughout our business,” said Chief Executive Officer Jay Schottenstein in a statement. “Aerie was simply outstanding, fueled by strong demand, with revenue rising 32% and record margins, demonstrating the power of the brand and signaling the vast opportunity ahead. Across brands, digital sales accelerated and we successfully reopened stores during the quarter.”

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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