Gold Fields considers Hong Kong
GOLD FIELDS MAY sell its shares on Hong Kong’s Hang Seng stock exchange later this year if a due diligence supports the move, the company says. If approved, the listing will continue the work of making the share tradeable around-the-clock, a strategy started in October.
That was when Gold Fields took a listing on Dubai’s DIFX (Dubai International Financial Exchange). According to Nick Holland, Gold Fields chief financial officer, trade in Gold Fields on DIFX is “pitiful”, but listing the stock there was not predicated on lifting turnover.
“There are individuals capable of buying R730m to R1,5bn ($100m to $200m) in one go,” says Holland. “You need only one of those big fish and you make the whole thing worth it.”
At the time of the DIFX listing, Gold Fields CEO Ian Cockerill said liquidity was
moving rapidly east from west. “Twenty to 30 years ago, all the capital was in the Western markets. Today, and into the future, that liquidity is moving rapidly East.”
The cost of listing on DIFX was about $100 000 with annual running costs at about half that value.
Some days, there’s no trade in Gold Fields on DIFX at all. But the exchange is still in its infancy, says Georges Lequime, an analyst for RBC Capital Markets. According to the DIFX website, five other companies are listed on the exchange, including a pharmaceuticals company and a hotel group. There are also a number of financial products backed by Deutsche Group.
There’s been some talk that investors in the Middle East traditionally prefer physical gold, and with access to foreign markets offering such tasty bites as Google and Walmart, there’s no particular allure in blue chip gold mining companies. Holland disagrees: “There are very different investors who buy physical gold versus an exchange traded fund. There’s very little overlap so we don’t think that’s an issue.”
Commenting on Hang Seng, Holland says trade tends to be better in gold stocks in China than Japan, which was another option.
There have also been some new listings on Hang Seng, creating an appetite for gold. Holland says he’s impressed by China Vision Resources, the company that bought an estimated R5,7bn portion of the Oppenheimer family’s stake in Anglo American last year. It recently listed in Hong Kong and has raised awareness around gold and resources companies, he says.
Only need one big fish. Nick Holland