BHP Billiton's spin-off South32 starts trading with a market value of nearly $9 billion, a third below the top end of forecasts. As Kirsty Basset reports it underlines investor nerves about the outlook for the battered mining sector.
It's one of the biggest mining debuts in recent years. And comes at a difficult time for the industry. South32 made its market debut in Australia after it was spun off by BHP Billiton, in order to allow the mining giant to focus on its core businesses. South32 started trading with a market value of almost $9 billion - but that's a third below the $13 billion valuation some analysts had given it - and perhaps a reflection of how investors are viewing the battered mining sector. CIBCs Jeremy Stretch. (SOUNDBITE)(ENGLISH) HEAD OF FX STRATEGY, CIBC, JEREMY STRETCH SAYING: "We've passed the period of the mining super cycle and I think we are seeing a deceleration in terms of the component prices in the specific areas that BHP are focussing on. And things like iron ore and coal for example don't look like they're going to be rebounding anytime soon, unless you take a much more constructive view of China." And that might be difficult, with analysts warning China's property sector is probably going to have its worst year in 25 years. (SOUNDBITE)(ENGLISH) HEAD OF FX STRATEGY, CIBC, JEREMY STRETCH SAYING: "It is a case of this sort of balancing act between trying to understand the deceleration in China and the impact that has on the mining sector in general. And as a consequence it's tough to be overly bullish." BHP Billiton shares fell 7.3 per cent in Australia. South32 will also trade on the London and Johannesburg stock exchanges.