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Cape Town - Glencore [JSE:GLN] shares surged over 20% on the Johannesburg Stock Exchange on Monday, tracking similar moves in both London and Hong Kong before giving up some of the gains in lunchtime trading.
By 13:52 the shares were trading up 13.04% at R22.19, after trading as high as R23.90, recuperating all of the previous week's losses.
AFP reported on Monday that the latest surge in the share price - as much as 20% in London, following a 25% leap on the Hong Kong market - came amid hopes that the company would sell some assets to cut its debt.
Shares in one of the world's largest diversified natural resource companies slumped almost 30% last Monday, before recovering towards the end of the week.
In a Hong Kong Stock Exchange filing on Monday, Glencore said it knew of no reason for the share movements.
"The board of directors of Glencore plc has noted today’s increases in the price and trading volume of the shares of the company... the board confirms that it is not aware of any reasons for these price and volume movements or of any information which must be announced to avoid a false market in the company’s securities or of any inside information that needs to be disclosed," Glencore chairperson Tony Hayward said in a stock exchange filing posted on its website.
Glencore's plunge last week came on the back of weak commodity prices amid slowing Chinese demand and as Investec [JSE:INP] raised doubts about the group's valuation if spot metal prices did not improve. Investec also warned about the company's high debt levels.
Reuters reported on Friday that Glencore was in talks with several parties, including a Saudi Arabian sovereign wealth fund, China's state-backed grain trader COFCO and Canadian pension funds to sell a stake in its agricultural assets.
AFP said analysts also cited a Telegraph report that Glencore would listen to offers for the entire company, but its management doubts it could find buyers willing to pay a fair value for the business in the current market.
"Glencore is tracking a spike in its Hong Kong shares and after the Telegraph report," Mike van Dulken, head of research at Accendo Markets told AFP.
Brett Birkenstock of Overberg Asset Management told Fin24 there is not much information around. He, however, ascribed the excessive volatility due to massive shorting (fuelled by speculation of balance sheet distress) followed by short-covering after US non-farm payroll numbers prompted a sharp rally in global equity markets.
In a move to soothe investor fears, Glencore said in a note to shareholders on September 29 that it had taken proactive steps to position the company to withstand current commodity market conditions.
It said the business remains operationally and financially robust – "we have positive cash flow, good liquidity and absolutely no solvency issues".
Glencore also said it was working on several measures to reduce its debt levels by up to $10.2bn.
